Donald Trump may not face his first criminal charges for another 18 months, but in an October 2021 merger deal between Digital World Acquisition and Trump Media and Technology Group, Truth Social’s parent company, the companies revealed they had a plan in place to mitigate the disruption that could arise if the former president were convicted of a crime.
In a filing with the Securities and Exchange Commission, the corporations cited two possible “material disturbing events”: Trump announcing his candidacy for the public or Trump being convicted of a crime.
Today, the newly merged corporations face any of those challenges, with Trump convicted on 34 counts and, simultaneously, in a position as the GOP’s presidential nominee.
The description of the contingency plan was vague: “The ownership and position of the company’s officer shall be structured in such a way as to eliminate the need for a restructuring of ownership or a replacement in the position in the event of a disruptive occasion for the curtains. “saying.
The merger agreements don’t involve any mention that the company’s executives would be convicted of a crime (or run for president), according to Xavier Kowalski, a senior lecturer in the Department of Finance at the University of Florida. “It definitely turns out that way was added in particular for Trump,” he says.
As for how the company plans for any of these circumstances, Kowalski didn’t see any major points in the SEC filing. “It does not appear that the definition of ‘material disruptive event’ has specific consequences,” he said. Only that the company knew that it was an option and that they deserved to investigate to minimize the damage. “
A significant disruptive occasion, even a popular term in merger deals similar to those signed through Digital World and Trump Media, according to Matthew Kennedy, IPO market strategist at Renaissance Capital, a provider of pre-IPO research.
Representatives for Trump Media did not respond to a question about the precise nature of the structure.
Although Trump owns 65% of the company, which represents a maximum of his net worth of $7. 8 billion, he is not the CEO. Instead, former Republican Congressman Devin Nunes holds the seat. Trump is also not on the board, though some of his loyalists are, in addition to Donald Trump Jr. and former Trump administration officials Kash Patel, Robert Lighthizer and Linda McMahon.
This setup may simply be part of the company’s threat control strategy. “Given that Donald J. Trump is no longer a director or executive of TMTG, the impact of his ideals on business operations deserves to be minimal,” said Jay R. . Ritter, a professor of finance at the University of Florida, specializing in early studies.
For investors, however, it is clear that Trump remains the main draw. Public markets have recently valued the company at $9 billion, even though it generated only $4. 1 million in profits last year. After the verdict, many Trump supporters took to Twitter, suggesting that other people show their support for the former president by buying shares in Trump’s media.
Editor’s Note: In November 2023, TMTG sued 20 media outlets, including Forbes, over reporting that included calculations of its monetary effects while it was still a personal company. The defendants asked to dismiss the charges on April 22.
Kyle Mullins contributed to the report.