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1988 1991 1994 1997 2000 2003 2006 2009 2012

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History Stock Price vs. EBITDA
1984 Michael Dell creates PCs Limited while at
University of Texas $45.00 $6.0

1988 Dell IPO $4.4


$33.75 $4.0 $4.2 $4.5
$4.0

($ in Billions)
$3.5
1999 Became the largest computer $3.0
manufacturer in the world $22.50 $3.0

2004 Michael Dell resigned as CEO $1.4


$11.25 $1.5
2007 Slowing growth leads Michael Dell to step
back in as CEO $0.00 $0.0
2007 2008 2009 2010 2011 2012 2013

Stock Price and LTM EBITDA negatively correlated

Dell has tried dividends, share buybacks and acquisitions

But stock price barely wavered

On February 5, 2013, Dell announced it had agreed to an MBO with Silver Lake

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Share Price:

$11.00 $13.42 $14.22 $14.14 $14.22

January February 5 March 7 March 24 April 5

Rumors that Dell Dell announces Icahn sends Icahn and Dell has agreed
in buyout talks agreement bear-hug Blackstone both to reimburse
with Silver Lake and 45-day go- letter and submit bids expenses
shop period reveals stake before the end
of the go-shop

*Neither Blackstone nor Carl Icahn have procured committed financing

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Sliver Lake Carl Icahn
Global leader in technology investing Raised in Queens
$14 billion Assets Under Management
Attended Princeton
Select portfolio companies:
Go Daddy Corporate Raider
SunGard Also currently involved in
Zynga Herbalife

Blackstone Michael Dell


$210 billion Assets Under Management Born in Houston, Texas

Among premier alternative asset management Founded Dell while a freshman at


firms University of Texas

Founded in 1985 In 1992, became youngest CEO of


Fortune 500 company
Publicly traded on NYSE
Owns 16% stake

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Shareholder governance: intersection between MBOs and fiduciary duties

Largest Technology LBO ever

Why go private?

Management claims that going private will allow them to focus on


long-term strategy

Need to reposition as an enterprise services company

PC market (~75% of Dells sales) commoditized

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Buyer could factor Dells receivables to raise extra cash

Blackstone proposed letting public investors participate

Complicated financing structure

None of the discussed scenarios do Dells cash flows justice

With 90% debt, only 4.0x Total Leverage

Dell will set the tone for future LBOs

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