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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.


Forum distribution:

Executives report progress of strategies after buying out public shareholders


For videos from the Dell World 2013 conference and related reports, see


Source: Forbes, December 16, 2013 article


Roger Kay, Contributor

I cover endpoints and how they relate to the cloud.

Tech   |   12/16/2013 @ 9:26AM

Bold New Dell Emerges As A Private Company

At Dell World last week, the community got its first close-up view of the company since the privatization this fall.  Partners, customers, industry analysts, media, and a couple of stars (Elon Musk, the founder of Tesla and SpaceX and Randi Zuckerberg, formerly of Facebook and now head of her own media company) showed up for a three-day confab, hosted by an ebullient Michael Dell. (Disclosure: My company, Endpoint, has a consulting relationship with Dell.)

Dell, the man, was looking relaxed in a way that I’d never seen.  His fight with Carl Icahn won and the weight of having to kowtow to Wall Street off his shoulders, he was obviously relishing his expanded range of possibilities.  Which possibilities the company is actually focusing on were most clearly enunciated by his CFO, Brian Gladden, who spent his press-conference slot talking about investment priorities.  At one point, Gladden mentioned “short term pressure on our P&L,” a phrase that, in the old days, would have caused a flurry of BlackBerry activity on the part of the herd of financial analysts in the room and an immediate plunge in the stock price.

In this case, there were no financial analysts in the room.  Since they can no longer speculate in Dell stock, where’s the fun?  They didn’t even bother to show up.  When I mentioned the absence of financial analysts to Dell himself, he queried, with his trademark twinkle, “Did anybody miss them?”

Evidently, he didn’t.  Life is far better without the obligation to follow the Byzantine morass of SEC rules and report quarterly to Wall Street.  The key difference is timeframe.  Having to report every quarter leads to a strategy that optimizes short-term results.  A company that isn’t required, for appearances sake, to maintain a smooth curve of profit growth can make long-term commitments.

And the company has huge flexibility in how it allocates costs.  For example, if Dell wants to incubate a business, it can reduce that division’s obligation to pay allocated overhead for, say, two years.  Overall corporate profit will drop, but the fact is, if a division can pay all its own operating costs and put even one penny toward SG&A, there’s reason to let it live, if, over the long haul, it’s going to become a productive business.  As long as the owners are on board — and now they are — the company can plan with a longer horizon.

In the shorter term, this release from having to report steadily rising profit also has the benefit of allowing Dell to compete harder.  I’m not saying that this is going to happen, but Dell could sell PCs right at the water line and sink Hewlett-Packard’s (HP’s) PC business, which currently generates around a 3% operating margin, into unprofitability.

And for those doubters, including me, who thought that Dell might leave at least some of its current PC markets, the company made it clear last week that it is doubling down on PCs.  And not just PCs, but also tablets, monitors, workstations, and bolder form factors such as a recently announced Chromebook for the education segment.  If anything, Dell is broadening out, with bets, for example, on Android, Microsoft’s Windows 8, and a range of tablet sizes.

But PCs are now a lower priority for Dell, which has chosen to reposition itself as a supplier of enterprise solutions, putting it more directly in competition with HP and IBM. Which brings us back to those investment priorities.

Gladden mentioned five:

1.  Expanding solutions offerings through a combination of internal (R&D) and external (M&A, Dell Ventures) investments,

2.  Enhancing and simplifying the customer experience,

3.  Increasing the company’s presence in emerging markets,

4.  Growing the PC, tablet, and virtual computing devices business, and

5.  Expanding the sales force and coordinating better with channel partners.

Gladden also spelled out the Dell Ventures investment model.  Companies must be relevant to Dell and in early to growth stage.  For the right opportunities, Dell will invest $2 million to $15 million and take a board or advisory seat.  Dell expects to lead or partner with other venture firms in these efforts.  As he wrapped up his spiel on Dell Ventures, Gladden mentioned that the company had just expanded the fund to $300 million and will examine areas beyond storage (a previous focus) such as cloud, next generation datacenter, mobility, security, and big data.

Big data analytics is one of those areas where Dell needs work if it wants to compete with world-class solutions providers.  The company’s base for this effort comes from the Toad Business Intelligence Suite, developed by Quest, which Dell bought for $2.4 billion in 2012. The current strategy makes heavy use of partners such as Oracle, SAP, VMware, and Microsoft.  Other partnerships announced at the event include Red Hat, Google, Dropbox, Accenture, and CenturyLink.

There’s plenty of work yet to be done, but Dell has the team and strategy in place and is executing on the plan.  Dell himself pointed out that, since going private, the company has experienced “double-digit” revenue growth, and he said sales were up 30% year on year on Black Friday.  The company has plenty of free cash flow to fund operations, debt obligations, and investment in future businesses.

Two words that kept coming up during the conference were “accelerate” and “bold.”  Privatization gives Dell the opportunity to accelerate its strategy, to make bold decisions, and with Wall Street out of the way, the company can turn its attention to customers and long-term investments in enterprise solutions.

Twitter: RogerKay


2013 LLC™


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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