Delaware AG Considers OpenAI’s Restructuring Plan, Hires Bank for Evaluation

The Attorney General of Delaware has reportedly engaged an investment bank to provide counsel on OpenAI’s transition into a for-profit entity, according to a report by the Wall Street Journal. This independent assessment has the potential to prolong the approval process or introduce further complexity to OpenAI’s strategic initiatives.

OpenAI’s conversion is aimed at facilitating new investments and paving the way for an eventual IPO. However, the company must first obtain the necessary approvals from state regulatory bodies. While both OpenAI and Microsoft have enlisted their own investment banks to advise on the transaction, the Delaware Attorney General is now seeking an independent evaluation of the equity stake that OpenAI’s nonprofit organization will retain.

Regulators are focusing on a critical aspect of OpenAI’s conversion, which could significantly impact the final price OpenAI pays to streamline its corporate structure. Corporate governance experts suggest that Elon Musk’s $97.4 billion takeover bid for OpenAI’s nonprofit, although promptly rejected, may have inflated the nonprofit’s value. This valuation is a key component of the ongoing assessment by Delaware officials.

The engagement of an independent bank suggests that Delaware is taking a cautious and thorough approach to ensure fairness and transparency in OpenAI’s restructuring. The evaluation will likely scrutinize the financial implications and governance structure to protect the interests of stakeholders.

The scrutiny from Delaware’s Attorney General underscores the complexities involved in converting a pioneering AI research organization like OpenAI into a for-profit entity. The outcome of this evaluation will have significant implications for the future trajectory of OpenAI and its relationship with investors and the broader AI community.