Crisis management lessons from Twitter’s response to Elon Musk’s hostile takeover bid

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As the drama over Elon Musk’s efforts to buy Twitter continues, the company’s strategy to resist the hostile takeover attempt continues. Musk’s unsolicited offer has created a crisis for Twitter and raised questions about the future of the social media platform.

The last example

Twitter is the latest example of companies that have had to respond to this type of crisis in a strategic, effective and efficient way.

According to technological crisis, “Hostile takeovers in the tech industry in recent years have been more publicized, but not necessarily more successful.

“Take Xerox and Hewlett-Packard, for example. In November 2019, Xerox, spearheaded by activist investor Carl Icahn, who held a 10.6% stake, approached Hewlett-Packard’s board of directors with an offer to merge the two companies.

“Hewlett-Packard rejected it and Xerox responded by announcing its intention to replace the entire Hewlett-Packard board of directors and launching a formal tender offer for Hewlett-Packard stock. Market conditions affected by the pandemic proved unfavorable to the deal, and Xerox agreed to stop pursuing it in March 2020.”

First lessons

What Twitter is doing to help stop Tesla’s CEO from acquiring the social media site — and how they’re doing it — provides important early lessons in crisis management for business leaders.

act fast

Twitter’s board was quick to respond to Musk’s offer to buy the company. The next day, they created a poison pill that made it harder and much more expensive for him to move forward.

Control your destiny

Nicholas Creel is an assistant professor of business law at Georgia College and State University. He observed that the poison pill strategy “exemplifies how good leaders do not allow their fate to be decided by others. If Twitter’s board hadn’t done anything, Musk likely would have continued to acquire stock to the point that, even if he hadn’t amassed a majority of the stock, he would be the de facto leader of the company. .

“This strategy puts the power back in their hands, allowing them to decide what comes next rather than relying on the whims of an outsider,” Creel commented.

Have the right priority

When responding to a crisis, make sure you know what you want to accomplish and why.

Retired United States Navy Captain Barbara Bell is a professor of leadership at Vanderbilt University and author of Flying Lessons: Navigating Through Life’s Turbulence and Learning to Fly High. She said, “With so much ego at play here, what value is being created for others? Value should always be at the forefront in leadership, and in this case, that value is overshadowed by egos on all sides.

“It seems that these opposing camps don’t take into account the importance of leading by example. Where is the congruence between behaviors and values? It is missing in this very visible example.

Keep people informed

Communication is important in any crisis. A special effort must be made to keep all those affected by the crisis informed of the situation and answer all their questions. Failure to do so can make a crisis worse.

According to eand New York Times, on Twitter, “Many employees felt shaken by the news over the past 10 days that Mr. Musk wanted to buy the company and reshape it in his image.

“To allay employee concerns, Twitter management called an emergency town hall meeting for 2 p.m. Thursday. It was led by Parag Agrawal, the company’s chief executive, according to five employees who attended and did not were not allowed to speak publicly.

“Mr. Agrawal tried to put on a good face during the rally, telling employees he thought ‘everything would go as it should,’ two of the people said. Some employees expressed frustration that Mr. Agrawal was not more open as Mr. Musk began quietly buying huge amounts of the company’s stock, according to two of the people.

Be ready for the backfire

Don’t be surprised when others criticize how you react to a crisis.

Business Intern rreported that Florida Governor Ron DeSantis said at a press conference on Tuesday that the state will attempt to hold Twitter’s board “accountable” for its poison pill defense against Elon Musk’s potential hostile takeover.

“The Florida State Pension Fund owns 949,690 shares of Twitter as of December 31, according to Bloomberg. “I think that’s probably hurt the fund, so we’re going to be looking at ways the State of Florida, potentially, can hold this Twitter board accountable for breaching their fiduciary duty,” he said. said DeSantis.

According to World NewsMusk “took a swipe at Twitter’s board on Monday after the social media company adopted a ‘poison pill’ strategy.”

“Board salary will be $0 if my bid is successful, so that’s ~$3M/yr saved there,” Musk tweeted in response to a user’s post criticizing the board. administration.

Prepare to answer

Like many crises, hostile takeover attempts can unfold over time, with events or developments that require an immediate response.

Forbes rreported that during a TED talk last week, “Musk insisted he had a ‘plan B’. And while he also insisted that the $54.20 offer per share would be his “best and last” opening, it’s certainly possible that Musk, the richest person in the world, could afford to keep pressing.

“He would need to sell Tesla stock or take out a loan to do that, and he said he’s brought in Morgan Stanley to advise him. His proposal has gotten a lot of support on Twitter – for a guy who lives on Twitter and likes to get the attention of his 81 million followers there, that’s important, and a significant portion of Wall Street analysts who follow the stock on Twitter think that’s a good price.

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