Experts differ as to whether CFO Ned Segal is likely to remain at Twitter's finance helm if Elon Musk ultimately pushes forward and completes his planned $44 billion takeover bid for the company.
In keeping with the fast-changing drama that has tracked the transaction as it has progressed, a series of tweets late last week raised the heat of the speculation around the future of both the take-private deal and existing management’s roles.
Early Friday Elon Musk tweeted that the deal was “temporarily on hold” pending details on the percentage of spam/fake accounts, though he also said he was still committed to the deal. Later Twitter CEO Parag Agrawal tweeted that he wouldn’t use the deal as an “excuse to avoid making important decisions,” noting that “some have asked why a ‘lame-duck’ CEO would make these changes.”
Clearing the decks
Agrawal’s tweet “just adds fuel to the fire,” said Dan Ives, a managing director and analyst at Wedbush Securities, who wrote in a text Monday that there is “likely no chance the current management team including Segal stays under Musk.”
Musk wants a “clean slate” and will “clear the decks once he takes over,” Ives said. The “street views this as a foregone conclusion and Twitter has been a disaster stock for a decade which is why they are in this situation with Musk.”
Steven Siesser, a partner and co-chair of the transactions & advisory group at the law firm Lowenstein Sandler, said in an interview early last week that partially private-equity backed acquirers similar to the Musk-led group would typically make changes at the board level as the deal closes but may take time, months to a few years, to evaluate the top executives.
However, a decision on whether Twitter executives remain in the new company could be swifter if they don’t agree with the new ownership’s mission, Siesser said. “If we believe that Musk has an agenda to uncensor Twitter, then it’s probably not a hard leap that anybody who disagrees with that philosophy is probably not long for this world,” Siesser said.
'Too great to pass up'
By contrast, Josh Crist, a co-managing partner at executive search form Crist|Kolder Associates, is more optimistic that Segal would remain. “I would say it’s more likely [Segal would] be retained given his institutional knowledge,” Crist said in an interview Friday. “It’s too great to pass up.”
Unlike traditional private-equity driven buyers who typically want to install a CFO familiar with private equity playbooks after a takeover, the Musk-led takeover bid is driven by “one gentleman” focused on more than just performance issues and the numbers, Crist said.
“We keep hearing about how he doesn't like the lack of free speech [on Twitter] and those are more esoteric issues than ‘I’m looking at the books and the books aren’t good,’” Crist said. Activists-type buyers are often more prone to change out a CEO and the board while keeping a CFO on to help operate the company, he said.
Segal, who has a mix of both investment bank and tech experience, is well-regarded in the CFO space and would be a sought-after candidate if he were in the market for another job, said Crist, adding he did not know if he was.
Segal joined Twitter in 2017 as CFO from Intuit where he had been senior vice president of finance, according to his LinkedIn account. Earlier in his career he spent over 16 years at Goldman Sachs, where he held such roles as head of global software banking and COO of tech banking.
At Twitter Segal’s role has gone well beyond the financials. He has acted at times as a spokesperson for the company. For instance last year then Twitter CEO Jack Dorsey left some confused when he spoke at a conference about Bitcoin. The next day in a CNBC Squawk Box interview Segal helped clarify the remarks. And Segal also made the media rounds to reiterate that Twitter would not back off its permanent ban of former President Trump from the platform. That could be a point of friction between Segal and Musk. Last week Musk said he’d reverse the permanent ban, according to The New York Times and other media reports.
Walking the line
One thing that is more certain, Siesser said, is that Segal is “incredibly busy right now.” That’s in part because finance chiefs in takeovers are typically tasked with providing much of the financial data that’s required for deal financing and how they provide that can shape how or if it gets done, Siesser said.
“The CFO plays a pivotal role in the transaction which puts them in a bit of a hot seat because they have to balance their duties being supportive to getting the financing done but also at the same time remember they still work for the seller,” Siesser said. They’re “almost serving two masters.”
One of the most important things for a CFO in a buyout situation to keep in mind is that the deal is not closed until it is, Siesser said. Until then, the finance chief’s duty is to the current shareholders and “stepping over the line and supporting the deal before the deal happens can bite you,” he said. “You have to walk a fine line of not alienating the buyer and not alienating the seller,” he said.
The relatively straightforward, at times even wholesome, recent tone of Segal’s Twitter account, suggests he may be seeking to walk that line. The account is topped with a pinned tweet from 2018 with a “Segal” chocolate chip cookie recipe he said he made with his “then girlfriend and now wife” in high school.
Segal has recently reweeted information announcing earnings information and often retweets comments made by Agrawal but on Friday he did not retweet Agrawal's thread which mentioned leadership changes he's made and the need to be "prepared for all scenarios" even as he expects the deal to close.
Segal, Twitter and Tesla did not respond to requests for comment.
