Can Dell Do Better Than Silver Lake?

Bernstein analysts wrote in a January 18 note seen by Reuters that they “suspect that the deal would likely be transacted at around $14-$14.50 per share.”

To determine whether Silver Lake’s offer is the best option, Dell has formed a special committee of the board and hired Evercore Partners (NYSE:EVR). In this case, an advisory board is of especial importance as Silver Lake has close ties to Dell, which could raise conflict of interest problems; Dell’s software president John Swainson served as senior advisor at the private equity firm until 2010 and Microsoft bought its Internet phone service Skype from the firm in 2011.

Michael Dell’s involvement is also a problem. Executives who have significant stakes in a company and are involved in the deal can also find themselves conflicted. As executives, their role is to secure the best deal for shareholders, but it would be in their best interest to buy out the company at a low price.

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