Dell Goes Private

Michael Dell

Michael Dell

Michael Dell’s company is once again Michael Dell’s company.

Just over six weeks after Dell put aside almost a year of bitter bickering with investors and finalized its plan to go private, Dell completed its go-private deal this week, as Dell and financial backers Silver Lake Partners paid all outstanding shareholders $13.75 in cash for each outstanding share of the company. That puts the value of the deal at just shy of $25 billion.

“Today, Dell enters an exciting new chapter as a private enterprise,” Dell (the man, not the company) said in a statement. “Our 110,000 team members are 100 percent focused on our customers and aggressively executing our long-term strategy for their benefit.”

So ends a ten-month journey on the part of Dell and Silver Lake to take Dell off the public markets, a step seen as necessary to take the short-term pain necessary for what it sees as long-term gains associated with transforming from a company centered around selling computing devices to a company centered around selling IT solutions.

Rumors started circulating in late January that Michael Dell was looking for investment backing to take the company he founded private, and by early February, Dell and Silver Lake announced their plans to make the move. It didn’t take long for opponents to the deal to start making their complaints known.

Eventually, the resistance to Dell’s move centered around Icahn, whose Southeastern Asset Management owns approximately 14 percent of Dell. The feud between Dell and Icahn became a bitter and high-profile tiff, only officially ending when Icahn said in mid-September it “would be almost impossible to win” enough investor support to hold off Dell’s bid. Icahn’s last shot was in the form of a letter in which he wrote, “The Dell board, like so many boards in this country, reminds me of Clark Gable’s last words in Gone with the Wind: They simply don’t give a damn.”

Dell’s reasoning for going private with the company, which has been publicly traded for a quarter-century, is simple: The company has been on a quest to re-create itself, transforming from a computer vendor into a much more full-stack IT products provider, ramping up key areas like converged infrastructure, cloud and software. But Dell found conflict in trying to accomplish both that long-term goal and meeting the short-term needs of Wall Street and investors. Dell could level a similar argument against Wall Street to the one Icahn makes about the board of directors. To Dell’s mind, the financial community simply doesn’t give a damn about long-term gain that may impact short-term growth.

“We believe that our proposed new ownership will provide long-term support to help Dell innovate, invest for growth and accelerate our transformation strategy,” Michael Dell wrote in an open letter to shareholders earlier this year. “We’ll have the flexibility to continue organic and inorganic investment and drive industry-leading innovation.”

With the public drama out of the way and the battle won, Dell can get back to focusing all its efforts on that transformation, and accelerating the process, which it sees as key to its long-term success.

“We are going back to our roots, to the entrepreneurial spirit that made Dell one of the fastest growing, most successful companies in history,” Dell wrote in a letter to partners released after the deal was made public. “We’re unleashing the creativity and confidence that have always been the hallmarks of our culture.”

Dell’s letter describes the forces of cloud, Big Data, mobility and security as a transformation of people’s relationships to technology in the spirit of the transformation brought on by the PC revolution almost 30 years ago.

“Now it’s time to do what Dell does best — make these innovations simpler, more affordable and more accessible, putting more power into the hands of more people than ever before,” he wrote.

The move should remove the distractions channel partners faced from customers caught in the will-they, won’t-they drama. It will also allow Dell’s channel team to focus on building PartnerDirect and helping its partners make the same transition its making. Dell channel chief Greg Davis has been adamant the buyout matter hasn’t taken the company’s eye off the ball, with evidence including the recent expansion of the channel program to include Dell’s software properties. In an e-mail sent to partners on the heels of the vote being announced, Davis promises that focus will continue.

“I want to state clearly that our commitment to you remains unchanged and this milestone presents an opportunity to serve our customers even better,” Davis wrote to partners. “As a private enterprise, we will continue to execute our strategy of delivering best-in-class solutions and growing our channel business. Quite simply, I believe our channel partners will benefit from, and see the value of, our accelerated strategy and business approach.”

Shortly after the battle to go private was won, Dell president Steve Felice told during a stop in Toronto that he doesn’t feel the company’s partners fully understand what Dell is capable of, and that raising that awareness in the channel community is a top priority for the newly-private vendor.

“Partners are still getting oriented to what we have. We’re trying to spend as much time as possible explaining all the capabilities we have, but our partners are still somewhat surprised,” Felice said. “We have a lot of capabilities that people just don’t know about right now. We have a phenomenal portfolio, and if we can use the relationships we have with partners and customers around the world, we can take some of these products with a very small footprint, and really explode it in a short period of time.”