Twitter’s lawsuit, claiming Elon Musk breached their merger agreement, is perhaps one of the most dramatic corporate conflicts of the modern era. At stake is the hefty $44bn price tag the Tesla founder offered for the social media platform back in April.

Musk, in short, wants out of the deal, his argument largely based on his claim that Twitter supplied insufficient information about the number and management of fake accounts on the platform. Twitter says they struck a deal in good faith and Musk must pay up for shareholders.

The case is now in court and the two sides are trading arguments through written submissions.

Observers of M&A transactions on both sides of the Atlantic, especially corporate lawyers, will be glued to proceedings, weighing the credibility of arguments and speculating on which way the case may go.

A lay reader of the documents, and especially board members, may fix on one element: due diligence.

Held to account

While most of the toing and froing in court documents is about how and who counted false user accounts, there are these nuggets in Twitter’s latest written response: “Musk forwent all due diligence—giving Twitter 24 hours to accept his take-it-or-leave-it offer before he would present it directly to Twitter’s stockholders.”

And this: “Musk neither sought nor obtained any ‘information rights’ that would allow him to investigate the accuracy” of regulatory filings to the SEC, “as part of some post-signing due diligence project”.

And this claim: “Musk sought an urgent deal, undertook no due diligence, and offered a self-described ‘seller-friendly’ merger agreement”.

Musk’s account to court argues that new facts came to light three days after the merger agreement was signed, when Twitter made new “daily active user” submissions to regulators. Days later, Musk met with Twitter bosses and was reportedly “flabbergasted” at what he learned about Twitter’s approach to identifying false accounts.

Musk says he asked for, but was “refused”, the “same information that Twitter relies on” in making its own estimates of the proportion of false accounts, which currently stands at around 5% or less.

The arguments continue and will no doubt underline the centrality of real and fake accounts in establishing the value of a social media business.

This week it emerged that Musk has raised $6.9bn through the sale of Tesla stock just in case he has to buy Twitter after all. But whoever wins, the case will underline the importance of appropriate due diligence. M&A lawyers, board members and senior managers will doubtless take note.