Lessons from Twitter - post-acquisition, merger or settlement disputes

Insights / / London

While there is often a collective sigh of relief when a deal makes it over the line, unfortunately it isn’t always the end of the story. Post acquisition, merger or settlement disputes can begin to erupt shortly after completion for a variety of reasons, whether relating to the formation of the deal itself or out of its consequences.

Media outlets have documented the various steps taken by Elon Musk following his takeover of the social media giant after settling the proceedings brought by Twitter. It is evident there are numerous potential post-settlement claims which could arise as a result.

But what are post-completion claims and why do they typically arise in this context?


During the negotiations leading to the formation of a contract, there will be lots of exchanges between parties in determining what the ultimate deal will look like.

While a settlement in the Twitter v Musk proceedings precluded a battle at trial, the subject of Musk’s case was that Twitter had misrepresented the number of spam bots on the platform as part of a “scheme to mislead investors about the company’s prospects”.

Misrepresentation can take many forms. However, it most prevalently occurs during an acquisition where a contracting party either fraudulently, negligently, or even innocently makes an untrue statement which induces the other party to enter into the terms of the contract.

The remedies available for misrepresentation are rescission of the contract and/or damages depending on whether the misrepresentation was fraudulent, negligent or innocent in nature and can, therefore, have a disastrous impact on the deal.  

A means of minimising liability for statements made during contractual negotiations is to include a carefully drafted “entire agreement clause”, which makes it clear that the written terms constitute the entire agreement between the parties.

A “belts and braces” approach would also see the inclusion of a “non-reliance clause”, whereby the parties agree that they did not enter into the contract due to reliance on any representations made by the other party, which do not form the written terms of the agreement or contract.

Breach of warranty and indemnity

The inclusion of warranties and indemnities within an agreement allows the parties to allocate risk between them. However, there is potential for claims to arise post-completion should it be determined that statements made about the company later prove incorrect.

While we are not privy to the terms contained in the agreement governing the takeover of Twitter, it will almost certainly have contained warranties and indemnities relating to assurances by Twitter as to the status of the platform in view of the litigation between the parties.

In England and Wales, the underlying principle of caveat emptor (“buyer beware”)applies. It is, therefore, sensible for buyers to consider the ability of the seller to pay the sum set out in any indemnities or for any breach of warranty. In that case it may be appropriate to require a guarantee to avoid enforcement issues should a claim arise in the future.

Disputes concerning the construction of the Share Purchase Agreement (SPA) or Asset Purchase Agreement (APA)

More generally, disputes can arise concerning the construction of the agreement reached between the parties, including the necessary steps for notification of any claims.

A recent decision in TP ICAP Limited v Nex Group Limited [2022] EWHC 2700 (Comm) affirmed the court’s approach to contractual notices insofar that the purpose of a contractual notification is to make it sufficiently clear that a claim is being made against a seller. If a contract prescribes that certain information has to be included, any notice that fails to do so will be invalid. If an agreement does not specify exactly what information a notice must contain, what is reasonable will depend on the circumstances and leaves scope for disparity in interpretation, which may require the time and expense of court intervention.

While the precise terms of the Twitter takeover deal are unknown, given the litigious past between the parties we would expect to see a robust notice provision to govern any post-takeover claims.

Ensuring the document governing the deal has been well-drafted to avoid ambiguity is essential in avoiding post-completion disputes.

Potential employment claims

Any company acquisition which involves employees has the risk of employment-related disputes or claims arising post-completion.

New owners will inherit existing employment issues and disputes which could carry substantial risk. The due diligence process should be used to identify existing and potential claims such as for unfair dismissal and discrimination.

The buyer should also ask about other thorny issues such as past compliance with National Minimum Wage requirements, and insist on the appropriate warranties and indemnities to prevent surprise and costly litigation down the line.

New owners often wish to make changes to a company’s staffing once they have taken over. We have seen this to an extreme degree in the case of Twitter under Musk. Twitter employees across the world received a memo soon after the takeover informing them of mass lay-offs and telling them they would find out if they were impacted via email. Staff were locked out of company premises and systems whilst they awaited notification.

Twitter is already facing a class action law suit in California brought by employees who say that the company failed to give the required 60 days’ notice under federal law before the mass lay-offs were made.

In the UK, employees have comparably greater protections than in the US. Here, Twitter will need to comply with collective consultation requirements if they propose making 20 or more employees redundant at one establishment within a period of 90 days. Twitter staff in the UK have now been asked to nominate employee representatives to represent them during this process.

However, it seems likely that Musk will look to push the redundancies through as quickly as possible, which risks allegations that there has not been a fair process and opens the door for employees to bring claims.

Post-completion, new owners should be aware that if an employee has two years of service they can only be dismissed for a fair reason, such as misconduct, capability or redundancy, and after a fair process. If you are looking to dismiss employees, you should proceed with caution and take advice.


Given the time and costs associated with dealing with post-completion disputes, much is to be gained by obtaining early advice to forecast potentially contentious areas.

If you are experiencing a commercial or employment dispute or want information or advice on pre-empting the contentious issues that could surface as part of an acquisition, merger or settlement, Ince can help. Please get in touch.

Charlotte Dawes

Charlotte Dawes Associate