Michael Dell Predicts More Buyouts as CEOs Seek Sale Advice

Dell Inc. CEO Michael Dell
Dell Inc. Chief Executive Officer Michael Dell, pauses during a Bloomberg Television interview on day two of the World Economic Forum (WEF) in Davos, Switzerland. Dell has served as a model for other hardware makers seeking to turn their companies around outside of the spotlight of public markets. Photographer: Simon Dawson/Bloomberg

Michael Dell, chief executive officer of Dell Inc., said he anticipates additional leveraged buyouts like the one he completed last year after more than 10 counterparts sought his advice on the process.

Dell said since his Round Rock, Texas-based personal-computer company became private last year in a $24.9 billion buyout, he now has 20 percent more free time and can better focus on long-term strategy. Dell declined to identify the executives or companies that have sought his advice on LBOs, though some of the companies are larger than Dell, he said.

“It’s been much easier managing the business through a private entity,” Dell said in an interview with Bloomberg Television’s Erik Schatzker at New York’s Council on Foreign Relations. “I think you could see some more based on the discussions I’ve been having with other colleagues.”

Dell went private in October 2013 in a controversial deal that was opposed by some investors including billionaire Carl Icahn. Icahn charged that Dell and his partner on the LBO, Silver Lake Management LLC, were paying too low a price for the buyout. Bloomberg News reported last month that Dell and Silver Lake have made a paper gain of at least 90 percent on their investment.

Dell has served as a model for other hardware makers seeking to turn their companies around outside of the spotlight of public markets. Joe Baratta, head of private equity at Blackstone Group LP, said in a Bloomberg Television interview yesterday. He said he has looked at about six $10 billion to $12 billion buyouts this year.

“The capital is there,” Baratta said. “It’s just the question of do you see the value.”

Activist Value

In today’s interview, Dell also discussed activist shareholders, saying they push companies to make short-term decisions that temporarily help shareholders but hurt the business later on.

“Activism is a bull market strategy and there’s a risk to that,” he said. “It certainly benefits during that short period of time but what happens later on? That’s a risk and certainly as a long-term owner-operator of a business I’m thinking about this over a lifetime and beyond.”

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