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31/01/2013 by

Michael Dell Seeks Buyout And Majority With Own Funds?

Dell founder and CEO Michael Dell seeks NASDAQ buyout and majority control with his own funds. That seems like putting your money where your mouth is?

Michael Dell Seeks Buyout And Majority With Own Funds? On

Dell, the PC maker he founded in 1984, is listed on the NASDAQ. But maybe not for long.

Michael Dell may contribute equity financing of $500 million to $1 billion, said insiders.

Dell is nearing a buyout led by Silver Lake Management, and Microsoft may provide part of the funding.

Michael Dell Seeks Buyout And Majority With Own Funds? On

Why Go Private Again?
Why would Michael Dell want to take Dell away from the NASDAQ and make his company private again?

Well, for Dell, going private could have several benefits.

By doing so, Michael Dell would be pushing his ownership stake past 50%. And that will enable him to reposition the company amid shrinking PC sales and an industry wide shift to mobile and cloud computing.

Without the scrutiny and stock fluctuations that come with being publicly traded.

Cisco’s Point of View?

During the World’s Economic Forum’s annual meeting in Davos, Switzerland Cisco’s CEO John Chambers stated: Dell buyout plan is very logical.

See the full interview on video with John Chambers.

My Opinion?
I can understand Michael Dell’s vision and future strategy. I and very much respect his bold move.

Also founder and CEO Jeff Bezos was very often misunderstood by analysts and shareholders.

Why I understand Michael Dell’s move, is rooted in a more personal experience within a NASDAQ listed companies, in the field of media, technology and innovation.

In 2008 I sold my agencies to WPP (NASDAQ: WPPGY). I called it: Pirates of the Caribbean within the Royal Navy.

Locked-in by my earn-out I learned the hard way that investing in technologies and innovations was not always easy within a listed company. A few reasons for that? Listed companies tend to take investments in OPEX, not CAPEX.

This means that long investments will hit your short term P&L. Mostly not what shareholders appreciate?

That’s why listed companies most often have a “Buy”, not a “Make” DNA. No need to bitch about it, it are facts of life.

However, I do believe that guys like Dell and Bezos are both not only extremely smart, they also have a splendid long term strategic vision.

More important, the power to put the money where their mouth is.

So I’d like to call Dell’s move a bold and disruptive one.

What About You?
How do perceive Michael Dell’s plans? What have you learned at a listed company? I’d love to read your opinion in the comments below.

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About the Author
Igor Beuker was CMO at 3 listed companies, chairman at the IAB, jury member at Webby, AMMA and Esprix awards, founder of 3 digital agencies (sold to WPP) and global chief social officer at Mindshare. Now he is ‘freejack’ consultant and a sought after keynote speaker.

Source: Bloomberg.


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