When Elon Musk announced this month that he wanted to take Tesla privately, his board was surprised. Barely three weeks later, the CEO told the board that he had changed his mind. Tesla would eventually stay public.
The surprising reversal – announced in a late-Friday blog post, one day after discussing it with the directors – covered a turbulent series of moves that attracted Wall Street's largest investment banks to investigators and new questions the leadership of Mr. Musk.
During this time, Mr. Musk came to the realization that his thinking had been too simplistic. While the private retreat would have eliminated some issues, he would have created new ones.
These were both symbolic and substantive issues for Tesla, whose future has been to make electric vehicles the transportation of choice – a vision that has made it the highest-rated automaker in the country. Even with his $ 55 billion worth of shares, he is concerned about many young companies, including his vulnerability to the whims of public shareholders.
Musk, in turn, is under new control, as its impulsiveness in effect affects time in the stock market, with billions of dollars on the line.
And even with the decision to hold Pat, Mr. Musk and the company were able to stay in the sights of the Securities and Exchange Commission on the circumstances of the original announcement
"Tesla investors must realize that they are panicking, Unpredictable, possibly self-destructive CEOs are at the top, "said Jeffrey Sonnenfeld, a professor at the Yale School of Management. "No C.E.O. is always so confused and confusing."
For years, Mr. Musk had romanticized the idea that Tesla became private. He made a public statement, ridding him of the short-term burdens of public markets, freeing him from the distractions of a volatile stock price, and lately getting rid of the short sellers who bet Tesla would fail. Instead, Mr. Musk believed he could concentrate on Tesla's work of popularizing electric vehicles and reducing the world's dependence on fossil fuels.
But from the moment of his nine-word Twitterpost his thoughts on Aug saying that he had "secured funding", other considerations came into play.
In pointing out that Tesla would remain public, Mr. Musk cited four major factors that changed his mind: existing shareholders believe Tesla is better off than a public company; not all existing investors could hold shares in a private company; It was not clear how individual investors would participate in a deal. and the process could distract the company from producing its first mass market offering, the Model 3, which is critical to its financial health.
Through the knowledge of people familiar with Mr. Musk's thinking, relationships with new private investors deepen their own challenges. By borrowing money from Saudi Arabia's sovereign wealth fund – which Mr. Musk believed was a safe bet – Tesla would have worked with a country whose foundations are fossil fuels and which is often criticized for human rights reasons.  This cognitive dissonance – an electric car company backed by big oil – has been shown to Mr. Musk several times, these people said.
When representatives of Tesla addressed the officials of the Saudi Fund and other sovereign wealth funds, it also became clear that they wanted more than just Tesla equity in exchange for an investment. Some, one said, who was informed about these talks, would expect Tesla, for example, to open production facilities in their countries.
And while several large automakers were advising Tesla on financing a business, people familiar with the discussions said, too. Some of these companies have their own reputation baggage. And Mr. Musk, who is proud that Tesla's cars are made in America, did not want foreign interests dictating his decisions about manufacturing.
At the same time, it became clear that not all major institutional shareholders of Tesla would have been able to participate in a buyout. Many large investors hold Tesla shares in funds that can only hold publicly traded shares.
"By and large, some of our clients will have a hard time to follow," James Anderson, head of Baillie Gifford, Tesla's largest shareholder after Mr. Musk, said in an interview before Mr. Musk broke a deal , "We have had this conversation with Mr. Musk himself and he understands that there is a problem here."
The same is likely to be true of other institutional investors in Tesla, including T. Rowe Price, BlackRock and Fidelity. And Mr. Musk heard about many individual investors who wanted to publish Tesla. On Thursday, a small Tesla investor published a public letter begging Mr. Musk to publish Tesla.
These pleas were noteworthy because many individual investors can not invest in private companies for regulatory purposes. On Thursday morning, Elon Musk and Tesla's board met for a regular meeting in the factory floor of the production facility in Fremont, California.
People with knowledge about the events said. They were accompanied by representatives of investment bank Goldman Sachs and private equity firm Silver Lake, who advised on a deal.
After a Silver Lake representative in a presentation expressed his confidence in his ability to find investors for a deal, Tesla Private – a deal that could have cost $ 24 billion or more – Wall Street officials left the room and Mr. Musk was given the floor.
But instead of telling his board how far he got to safety New investors in a possible business, Mr. Musk went back: he no longer believed that going privately was in the company's best interests, and he would not Proposal to buy the company.
That would be so distracting, big institutional investors could not all attend, and there was no easy way for the involvement of retail shareholders, he told the board.
The Directors – some of them have expressed their concern about M. R. Musk's use of Twitter and erratic behavior – were supportive.
During the meeting, the board voted to dissolve the special committee set up to evaluate a potential business. And before lunch, the meeting – which took place in the same room where Mr. Musk sometimes slept at the factory on late nights – was over.
Later that day, Mr. Musk drafted a statement that Tesla would remain public board-approved Thursday night. On Friday, Mr. Musk and his team refined the office of SpaceX, his private rocket company near Los Angeles, and refined the letter.
In the statement, even though he withdrew from the idea of privacy, Mr. Musk redoubled his original claim that he had the financial support. "My belief that there are more than enough resources to keep Tesla private has been reinforced during this process," he said.
However, the SEC, which is investigating whether Mr. Musk's original tweet of a potential buyout violates the Securities Law, may say more about the sequence of events – notably the statement "Financing Secured." The initial tweet sent Tesla shares up and led to a disruption of trading until a more comprehensive announcement was made. In the weeks that followed, the stock lost value and never nearly reached the $ 420 buyout price that Mr. Musk had thought possible, indicating investor skepticism.
"In a sense, the influence of the first tweets decreases." Peter Henning, a law professor at Wayne State University, said the reversal. "But the SEC looks at what happens at the time of disclosure, and if you go back later, you will not reduce the effect, and it was clearly incomplete."
"You can not throw out information that moves the market and says," Power nothing, "added Mr. Henning." This is the CEO the company. His statements are the statements of the company. Will you be an example for him? Maybe.
And while Mr. Musk had pacified some constituencies, management experts shook their heads in the chaotic process, which started with a tweet, as Mr. Musk drove his Tesla Model S around Los Angeles for nearly two weeks
" A large company should not go through its ownership path and market valuation through the CEO's hectic, public, volatile impulses, "said Sonnenfeld." Not to mention the selective revelations of elite shareholder votes. "
Kate Kelly and Jessica Silver-Greenberg reported reports.
Follow David Gelles on Twitter: @dgelles .