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Dell Personally Lobbies Partners On Private Equity Deal

Michael Dell is reaching out to partners personally to make sure they understand what is at stake in the company's $24.4 billion private equity bid
Michael Dell, CEO, Dell, wants to make sure there is no misunderstanding about what his company's $24.4 billion private equity bid means to solution provider partners.

Sources said Michael Dell, who founded the company 29 years ago, is reaching out to dozens of customers and partners to make sure the company does not miss a beat as it moves to close the private equity deal.

Dell partners, for their part, say Dell's bid to take the company private will pave the way for Dell to make bigger investments in research and development, channel sales, and services as well as make additional acquisitions that will strengthen the Dell enterprise solution and services portfolio. What's more, they say, Michael Dell's vision and hands-on involvement in accelerating the company's transformation from one-time desktop kingpin to full enterprise solutions company is critical to the private equity bid.

One executive close to the Dell private equity bid said he sees the Dell founder's "commitment to the business" and the ability to make significant new investments as key to accelerating the company's end-to-end solutions transformation. "Going private allows Dell to spend more on R&D, add more salespeople, acquire more companies. It means Dell is going to get more aggressive," said the source who requested anonymity. "Most of the partners are private companies, they know what it means to be private. If you look at the last five years, Dell has built a very substantial end-to-end solutions business with software and services. Dell's channel and partner relationships have grown tremendously. This will continue, and in fact, this go-private transaction will just accelerate the company's transformation. The only ones that don't like this are the competitors because it will make Dell more competitive."

A source inside Dell said the company will lay out some of the company's aggressive plans from the privatization bid in a proxy that will be released shortly after the go-shop period ends on March 22. "People have speculated that maybe Dell is getting out of this business or getting out of that business, or they are not going to do PCs anymore," said one source inside the company who spoke under the condition of anonymity. "That is all nonsense. This is all about growth. This will allow us to make investments that in the short term would reduce the earnings of the company but are intended over the long term to grow the company's revenues substantially. We are building lots of new capabilities and that requires investment."

The Dell insider said the company will not only make big new investments in additional software and services but also continue to invest in client devices including tablets and PCs. "What we found is that hardware by itself was insufficient to be able to solve the challenges and opportunities that our customers have presented us, and so together with our partners, we built this whole range of end-to-end solutions," said the Dell insider. "That is why you have seen us aggressively expand with $10 billion worth of acquisitions, data center, systems management, security, services. You put all of that together and we have a very, very broad set of solutions that dramatically expands the available market for us."

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