Michael Dell Really Can’t Lose: How He Transformed A Struggling P.C. Business Into $30 Billion

Michael Dell Really Can’t Lose: How He Transformed A Struggling P.C. Business Into $30 Billion

"Dell Can't Lose," read the cover of Forbes Magazine on November 18, 2013 as we chronicled how personal computer billionaire Michael Dell relented against Carl Icahn to take his company private in what was dubbed "the nastiest tech buyout ever." Here are the eye-opening numbers: When Michael Dell took Dell private in 2013 with the help of Silver Lake Partners, he rolled $4 billion of his own Dell shares and contributed a further $750 million in cash to get the $25 billion deal done. Partner Silver Lake, a technology focused private equity firm, added equity to the leveraged buyout. Then Dell and Silver Lake then doubled down in an enormous way. In late 2015, they used still privately-held Dell Technologies to strike a $67 billion cash and stock merger with virtualization software giant EMC EMC +0% , which had just listed its valuable VMWare VMW +10.24% business on public markets. MSD Capital, Michael Dell’s family office, committed about $2.8 billion in cash to get the EMC merger done. Dell Technologies is proposing to buy the tracking stock it listed to pay for EMC in 2016, otherwise known as Class V shares, for a total implied value of $21.7 billion. Will Monday's deal get done? He ranked #39 on the 2018 Forbes Billionaires List, with a net worth of 22.7 billion. This could go down as one of the private equity industry's most profitable deals.

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Forbes’ November 2013 cover on how Michael Dell won the war to take his company private.

Dell Can’t Lose,” read the cover of Forbes Magazine on November 18, 2013 as we chronicled how personal computer billionaire Michael Dell relented against Carl Icahn to take his company private in what was dubbed “the nastiest tech buyout ever.”

If anything the cover was a tad understated.

It’s now clear Mr. Dell stands to make a fortune from Dell’s privatization, turnaround, and inevitable return to public stock markets. So much so, here’s an update on what it meant to be the victor: While Carl Icahn made a small profit challenging Dell for greenmail before ultimately ceding defeat, Michael Dell has accrued a paper fortune from the deal that is alone greater than the net worth of his onetime foe, Icahn.

That’s the takeaway from Dell’s proposal on Monday to return his company to public stock markets after a near five-year absence. Having committed what Forbes estimates to be about $7.5 billion in Dell stock and personal cash to build his current holding, Michael Dell is now sitting on a stake in Dell Technologies DVMT +9.01%

worth about $30 billion. It means he’s made more than Icahn’s net worth in paper gains by turning around Dell, deploying deft management chops and even more skillful financial gymnastics.

Here are the eye-opening numbers: When Michael Dell took Dell private in 2013 with the help of Silver Lake Partners, he rolled $4 billion of his own Dell shares and contributed a further $750 million in cash to get the $25 billion deal done. Partner Silver Lake, a technology focused private equity firm, added equity to the leveraged buyout. Also important: Spongy debt markets, which Dell and Silver Lake tapped to the tune of $15 billion.

Once private, Dell Technologies defied many skeptics.

Instead of imploding, the company’s personal computer business held strong. Prior to going private, Dell had also spent billions accumulating valuable businesses like IT service giant Perot Systems, cloud players Boomi and Wyse Technology, and security specialists SecureWorks, SonicWall, AppAssure and Quest Software. Within a few years, Dell stitched together acquisitions like Quest and SecureWorks into a more cohesive package of services for its PC and server customers. By the end of 2015, it was on the road to investment grade status, having both boosted profits and paid down billions in debt.

Then Dell and Silver Lake then doubled down in an enormous way.

In late 2015, they used still privately-held Dell Technologies to strike a $67 billion cash and stock merger with virtualization software giant EMC EMC +0%

, which had just listed its valuable VMWare VMW +10.24% business on public markets. Joseph Tucci, EMC’s CEO at the time, listed a 18% interest in VMware to highlight the value of its component parts. It was Dell and Silver Lake that took notice and pounced, deciding to buy EMC and its remaining 82% interest in VMware outright.

MSD Capital, Michael Dell’s family office, committed about $2.8 billion in cash to get the EMC merger done. Silver Lake and its limited partners also doubled down, and Singaporean sovereign wealth fund Temasek was brought in to provide additional cash. Again, Dell’s ambitions were helped by loose debt markets: Nearly $50 billion in debt was raised to pay for EMC. VMware’s 18% stub was kept publicly traded. Dell also listed a tracking stock…

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