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The Shareholder Forumtm

special project of the public interest program for

Fair Investor Access

Supporting investor interests in

appraisal rights for intrinsic value realization

in the buyout of

Dell Inc.

For related issues, see programs for

Appraisal Rights Investments

Fair Investor Access

Project Status

Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.

Note: On December 14, 2017, the Delaware Supreme Court reversed and remanded the decision above, encouraging reliance upon market pricing of the transaction as a determination of "fair value." The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for the realization of intrinsic value in opportunistically priced but carefully negotiated buyouts.



Note: The author of the commentary below was asked on March 3, 2013 to clarify his statements which not only confuse the purpose of the Shareholder Forum’s Dell valuation project but also unfairly suggest that the conduct of Dell’s special committee needs to be defended. In fact, neither the Forum nor the New York Times article referenced by the author had addressed any question at all about the integrity of the special committee’s process, which appeared from what was reported in a Dell press release to have followed all the currently accepted best practices under the guidance of respected professionals. It should be understood from the Forum’s reports (see, for example, the February 28, 2013 Forum Report: Range of Dell Investor Information Requirements), as well as from the New York Times article, that the Dell valuation project is focused instead on the need for investors to make their own decisions, and on their need for fair access to the relevant information.

The author declined to make the requested clarifications of his statements in a series of emails asserting the relevance of his defense of Dell’s special committee.

On March 4, 2013, Dell Inc. filed an SEC Schedule 14A (for disclosures of proxy solicitation material) reporting that the company had distributed the article below to employees. For a previously published report of employee views, see


Source: Bloomberg View, March 3, 2013 commentary



Michael Dell Isn’t Trying to Pull a Fast One


Michael Dell roiled Wall Street and the technology industry by announcing last month that he and the private-equity firm Silver Lake Partners would be taking his eponymous home-computer maker private. The deal raised many questions -- most important, whether Dell, by far the largest shareholder, and Silver Lake were paying Dell’s fellow shareholders a fair price for their stock -- yet I’ve read little in the business press that tackled them satisfactorily.


About William D Cohan»

William D. Cohan is the author of the recently released "Money and Power: How Goldman Sachs Came to Rule the World" and the New York Times bestsellers "House of Cards" and "The Last Tycoons."

Cohan is a contributing editor at Vanity Fair and writes frequently for Financial Times, Fortune, The Atlantic and The Washington Post. He worked on Wall Street as a senior mergers and acquisitions banker for 15 years. He also worked for two years at G.E. Capital. Cohan is a graduate of Duke University, Columbia University School of Journalism and Columbia University Graduate School of Business. "The Last Tycoons" won the 2007 Financial Times/Goldman Sachs Business Book of the Year Award.


So I was pleased to open my New York Times last week to see that Gretchen Morgenson, the Pulitzer Prize-winning financial columnist, was delving into the Dell Inc. deal. Thanks to her long tenure, sharp insights and willingness to speak truth to power, she is arguably the most respected financial writer around.

Yet this time my pleasure turned to dismay. Morgenson, writing about the need for an independent, third-party financial evaluation of Silver Lake’s and the management’s $24.4 billion proposal for Dell, got it terribly wrong.

This is not because the need for a powerful independent voice representing non-management shareholders is a boneheaded idea. Rather, it’s such a good and important idea that the Dell board had already thought of it, and done it. Morgenson acknowledged this in passing, but nonetheless said that “investors would benefit” from a new investigation by something called the Shareholder Forum, a “nonpartisan” (whatever that means in this context) organization headed by a former investment banker, Gary Lutin, that says it supports “investor access to decision-making information.”

Shareholder Interests

For those who came away from the Morgenson column with the impression that Michael Dell might be stealing his own company, I’ll recount what really happened over the last few months. The facts should give comfort to Dell shareholders otherwise worried that nobody was looking out for their interests while the deal went down.

In August 2012, Dell, a 48-year billionaire, told his board of directors, of which he was the chairman, that he was considering making a proposal, with a to-be-determined private-equity firm, to buy the 86 percent of the company he didn’t already own. Immediately, as is appropriate under the circumstances, the board formed a four-member “special committee” to evaluate Dell’s proposal on behalf of the outside shareholders of the firm. As its chairman, the directors selected Alex Mandl, a former telecommunications executive whom I know as an extremely honorable man from my days as an investment banker. The special committee consisted of three other people I don’t know, but who from all accounts are also highly respected: Ken Duberstein, a former chief of staff to President Ronald Reagan; Laura Conigliaro, a former technology analyst and partner at Goldman Sachs Group Inc.; and Janet Clark, the chief financial officer at Marathon Oil Corp.

The special committee has met more than 25 times, according to Dell’s public filings, including participating in six board meetings with only the independent directors present (meaning without Michael Dell, the board’s chairman.) Working with JPMorgan Chase & Co., its financial adviser; Debevoise & Plimpton LLP, its legal adviser; and an unidentified management consultant who was hired to conduct a strategic review of the company, the committee spent five months considering a variety of alternatives to what Dell was proposing.

It explored all options in search of maximizing shareholder value: Should the company stay public and continue to execute its business plan? Should it modify its business plan? Should the company do a “leveraged re-cap” -- take on some debt and pay out a dividend to shareholders -- while the stock remained publicly traded? Should the company sell assets, such as its financial-services arm or its personal-computer business? Should Dell sell itself to another company or consider a merger?

Raised Bid

In late October, the special committee started negotiating with Silver Lake as well as another (unidentified) private-equity firm that was also considering buying Dell. While the specifics of the bidding have not yet been released publicly --that will likely be explained more fully in the proxy statement to be filed in May before the shareholder vote -- the special committee asked both private-equity firms to increase their initial bids in order to stay in the process. Silver Lake raised its bid; the other firm dropped out.

The committee then invited a third private-equity firm to perform due diligence and to make a bid for the company. But after a few weeks spent studying Dell Inc. (DELL) from the inside, it also dropped out. Then the special committee sat down to negotiate a final price and a contract with Silver Lake. At one point, the committee got Silver Lake to increase its final price to $13.65 per share after Michael Dell agreed to value his own shares at $13.36 per share, a 2.2 percent haircut that cost him a cool $71 million of value. Not material to a billionaire, perhaps, but a nice gesture all the same.

Michael Dell made another important concession to the special committee: That a majority of the non-management shareholders would need to approve the deal for it to happen, essentially silencing his own millions of votes.

But wait, there’s more. The special committee then hired Evercore Partners Inc. (EVR), the investment-banking firm, to find a higher bid for Dell, if possible. Evercore has 45 days (and perhaps even longer under some circumstances) to find a better offer; its compensation is heavily skewed toward doing just that. The special committee also negotiated a minuscule breakup fee of $180 million that would go to Silver Lake if the deal fell through, far less than the 3 percent of equity value that has become a norm. This means anyone wanting to top the Silver Lake deal would only have to pay an additional dime, or so, per share to do so, chicken feed in this context.

Although the $13.65 per share offer for Dell was a 37 percent premium to the average closing price of Dell stock during the previous three months, and JPMorgan deemed the price “fair” from a financial point of view, it is not a surprise that some shareholders -- such as Southeastern Asset Management Inc., the second-largest shareholder -- want a higher price. Of course, they do. When it comes to a buyout offer, more is always better.

To suggest that the special committee didn’t do its job is an insult to its members and to its advisers, who certainly appear to be working very hard to get the best deal for all shareholders. If you have Dell stock and you don’t like Silver Lake’s deal, the solution isn’t to get another valuation. The solution is to vote down the deal and live with the consequences.

(William D. Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres, Merrill Lynch and JPMorgan Chase. The opinions expressed are his own.)

To contact the writer of this article: William D. Cohan at

To contact the editor responsible for this article: Tobin Harshaw at



This project was conducted as part of the Shareholder Forum's public interest  program for "Fair Investor Access," which is open free of charge to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The management of Dell Inc. declined the Forum's invitation to provide leadership of this project, but was encouraged to collaborate in its progress to assure cost-efficient, timely delivery of information relevant to investor decisions. As the project evolved, those information requirements were ultimately satisfied in the context of an appraisal proceeding.

Inquiries about this project and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.