In a merger agreement between Digital World Acquisition and Trump Media and Technology Group, the parent company of Truth Social, it was revealed that there was a plan in place to address any potential issues that might arise if former President Donald Trump were to be convicted of a felony. The agreement identified two potential “material disruptive events”: Trump announcing a run for public office or Trump being convicted of a felony.
Fast forward to the present, and both of those challenges are now a reality, with Trump being convicted of 34 felony charges and also positioned to become the Republican party’s presidential nominee. The disclosure in the merger agreement about the contingency plan was vague, stating that the company principal’s ownership and position would be structured in a way to eliminate the need for restructuring should a material disruptive event occur.
According to Xavier Kowalski, a finance lecturer at the University of Florida, it is unusual for merger agreements to specifically address scenarios involving company principals being convicted of felonies or running for president. The addition of this language in the agreement seems to have been made specifically for Trump. However, there were no specifics in the SEC filing about how the company planned to address these circumstances, aside from minimizing any potential damage.
Despite owning 65% of the company and most of his $7.8 billion net worth being tied up in it, Trump does not serve as the CEO of Trump Media. Former Republican Congressman Devin Nunes holds that position, and Trump is not on the board of directors either. Some of his loyalists, including Donald Trump Jr. and former Trump administration officials, are on the board.
For investors, Trump remains a significant draw for the company, even though it only generated $4.1 million in revenue last year. The public markets are currently valuing the business at $9 billion, and after the verdict, Trump backers took to Twitter to encourage support for the former president by purchasing stock in Trump media. Despite Trump’s convictions, the impact on the business operations is expected to be minimal due to his reduced role in the company.
In November 2023, TMTG filed a lawsuit against 20 media outlets, including Forbes, for reporting that included financial calculations while the company was still private. The defendants moved to dismiss the claims in April 2024. The future of Trump Media and Technology Group remains uncertain as the company navigates the challenges of Trump’s convictions and his potential presidential nomination. Time will tell how these events will ultimately impact the company and its operations.
