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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 reference:

Rewards of informed investors


Source: Bloomberg, November 5, 2014 article


Dell, Silver Lake Said to Reap 90% Gain a Year After LBO

By David Carey and Jack Clark | Sep 10, 2014 7:01 PM ET

A year after taking Dell Inc. private in a $24.9 billion buyout, Chief Executive Officer Michael Dell and private equity firm Silver Lake Management LLC have made a paper gain of at least 90 percent on their investment, two people with knowledge of the matter said.

Silver Lake last year invested $1.4 billion and Dell himself put in a stake worth $4.2 billion to take the company private, with the rest of the transaction financed by debt and cash from the personal-computer maker. Now Dell’s equity value stands at $10.8 billion or more, based on valuations of Hewlett-Packard Co. and other publicly traded rivals, said the people, who asked not to be identified because the details are private.

That’s almost two times the $5.6 billion that Silver Lake and the company founder invested in the leveraged buyout. The CEO now owns 75 percent of the Round Rock, Texas-based company, and Silver Lake has a 25 percent stake.

Dell Chief Financial Officer Thomas Sweet declined to comment on the numbers yesterday, as did Emily Levin, a Silver Lake spokeswoman at Brunswick Group LLC.

The return adds up to an early victory for Dell and Silver Lake, which undertook the buyout to turn the company around without public scrutiny after it failed to quickly adapt to the mobile and cloud-computing era. The deal faced controversy before its completion on Oct. 29, 2013, with opponents including billionaire investor Carl Icahn charging that Dell and Silver Lake were paying too low a price for the buyout. Icahn waged a battle to derail the deal, pushing the buyers to ultimately sweeten their price.

Icahn didn’t return a request for comment yesterday.

Dell’s Position

At a Dell World conference in Austin, Texas, this week for customers and partners, Michael Dell said he “couldn’t be more pleased with the positioning, the progress and the performance of our business.”

The jump in Dell’s value over the past year stems from a surge in the company’s cash flow and a decrease in debt, said the people familiar with the matter. Cash flow is projected to rise above $3.5 billion for fiscal 2015, which ends in January. That’s up from $3 billion at the time of the buyout, said one of the people. The company has used much of the cash flow to shrink debt to around $15 billion, down from about $18 billion a year earlier, the person said.

“Over the next couple of years, it’s our intention to be fairly aggressive on debt paydown,” Sweet said in an interview.

PC Sales

Dell’s performance has been aided by an improvement in the PC business. As of the third quarter, Dell had 13.3 percent of the market for worldwide PC shipments, up from 11.9 percent a year ago, according to researcher IDC.

The PC market in general isn’t declining as quickly as projected. In the third quarter, PC sales fell 1.7 percent, less than the anticipated drop of 4.1 percent, as corporate demand holds up some sales, according to IDC.

Dell plans to build upon the improving PC environment with more offerings for customers so it can be what Michael Dell calls an “end-to-end” technology provider. Dell is working to expand capabilities in areas like data center storage, software, security and data analytics, said Sweet. The company also plans to increase services to industries including health care and insurance.

Fewer Distractions

Being private has helped Dell’s performance over the past year, company executives said. The company has been able to make speedier decisions without the distraction of board meetings and quarterly financial analyst meetings, said Suresh Vaswani, president of the services division.

When Dell bought data-analytics company StatSoft Inc. in March, the deal was done in two meetings, half the time it would have taken if Dell was still public, said Prakash Jothee, vice president of corporate strategy. Terms of the deal weren’t disclosed.

Dell can also afford to be choosier about which businesses to pursue, without public investor scrutiny. As part of that, the company may cede ground to low-cost server-computer rivals where profit margins are declining, said Dell President Marius Haas.

“I’m not trying to be king of the zero profit pool,” Haas said. “I want share gain, but I want profitable share gain.”

Some of Dell’s customers said the company has become more responsive since going private. Jason Cook, chief technology officer of BT Group Plc (BT/A)’s North America Global Services division, said at Dell World this week that he no longer faces the challenge of navigating through various parts of Dell and that the company is tailoring products more quickly for specific customer needs.

“The pace of stuff being deployed was once a year, now it almost feels like once a quarter,” Cook said in an interview. “I’m not left hanging.”

To contact the reporters on this story: David Carey in New York at; Jack Clark in Austin at

To contact the editors responsible for this story: Pui-Wing Tam at; Christian Baumgaertel at Jillian Ward


©2014 Bloomberg L.P. 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.

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