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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.



For an earlier column about possible objectives of orchestrated negotiations and a subsequent report of arrangements to present an alternative to the "stalking horse" bid addressed below, see


Source: The Wall Street Journal, March 27, 2013 article


HEARD ON THE STREET  |  Updated March 27, 2013, 4:17 p.m. ET

Silver Lake's Win-Win Approach to Dell


Is the guy who "wins" an auction really the winner, or just the sap that paid the most?

Silver Lake Partners may ponder that in the battle for Dell. The private-equity firm certainly has two big reasons not to overpay.

One is that it won't be too painful to lose the deal, considering the roughly $200 million the firm would pocket should Dell end up in other hands. That includes the $180 million breakup fee plus other investment expenses.

Worth noting is that a sizable portion of that money would go to the firm's partners. Private-equity firms' share of investment profits is normally 20%, with the rest going to investors. But Silver Lake typically keeps half of fees like this one. Silver Lake Partners has seven senior leaders and seven other managing directors. Any way you slice $100 million, it would be a nice payday.

Still, the bigger reason to be disciplined on price is the obvious challenges Dell faces. Having partnered with founder Michael Dell, it seems Silver Lake wouldn't drastically change the company's strategy. Lately, that strategy hasn't worked out so well. So naturally, Silver Lake wants a margin of safety built into the bid.

Indeed, this is echoed in the use of "stub equity" structures in Blackstone Group's BX -1.35%and Carl Icahn's competing proposals. These allow existing Dell investors to participate in any future gains—a reflection that bidders aren't willing to take those gains for granted and pay substantially more upfront.

Write to Rolfe Winkler at

A version of this article appeared March 28, 2013, on page C10 in the U.S. edition of The Wall Street Journal, with the headline: Silver Lake's Win-Win Approach to Dell.

Copyright ©2013 Dow Jones & Company, Inc. All Rights Reserved


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.

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