Michael Dell and his backers are considering trying to pull together about $20 billion in debt and equity to seal the deal for a leveraged buyout. Dell’s stock price has declined by almost half over the last five years. The company has exhibited some difficulty with adapting to the new world of mobile devices and cloud computing. The opportunity to shift from a public company to a private one may create some financially strategic advantages (Serena Saitto, Jodi Xu, and Cristina Alesci. “Silver Lake Is Said to Be Near Financing on Dell LBO” Bloomberg.com, 1/19/13):
“Turning the computer maker into a private company would allow Michael Dell and his private-equity backers to manage the company’s finances differently, said a person familiar with the matter. For example, they could borrow money by securitizing accounts receivables, a move a public board and public shareholders would likely reject, said this person.”
This will be an interesting situation to watch. I have followed Dell closely throughout its lifecycle. The company has had its ups and downs, but I think the ups have far outweighed the downs. Then again, going private could be the first step in a real downward position. For the company’s sake and its customers’ sake, I sincerely hope not.