Michael Dell | wealthymatters

Why Go Private?

March 28, 2014 Leave a comment

wealthymatters Being the promoter of a public company is seen as prestigious.So why do promoters sometimes opt to make their company private again?The simple answer is often the possibility of Private Gains.Public share holders and promoters often have vastly different perspectives on making money,vastly different time horizons when it comes to harvesting gains,vastly different risk perceptions and holding power.Here is an example:

In early ’13,Dell had a total market cap of about $22 billion. They also had about $11 billion in cash, which meant the stock market was valuing the entire business at $11 billion ($22 – 11). The company had a price-to-earnings multiple of about 8.5.

So the situation was that, if Michael Dell and private equity investors put in $2 bilion, used the cash on the company’s books and borrowed the remaining $9 billion, they could control the entire company without the hassle of having public shareholders.

The flexibility of not having public shareholders would enable Michael to do what has needed to be done for years, and that is massively streamline the company’s manufacturing and sales forces (probably through layoffs), re-focus the core PC business, grow the enterprise and consulting businesses, and make the company generally more Lenovo-like or IBM-like. Read more of this post

Filed under Alternative Assets, Entrepreneurship, Paper Assets, Theory, Tool Kit Tagged with Dell Buyout, going private, Michael Dell, postaday, private company, Private Equity, public company

The Fifty Richest People On Earth

December 23, 2012 Leave a comment

Filed under Tidbits Tagged with Abigail Johnson, Alice Walton, Amancio Ortega, Anil Ambani, Anne Cox Chambers, Bernard Arnault, Bill Gates, Billionaires, Carl Icahn, Carlos Slim Helu, Charles Koch, Christy walton, David Koch, David Thomson, Donald Bren, Forrest Mars jr, George Kaiser, George Soros, Gerald Cavendish Grosvenor, Hans Rausing, Ingvar Kamprad, Jack Taylor, Jacqueline Mars, Jim Walton, John Mars, Karl Albrecht, Kwok Family, Lakshmi Mittal, Larry Page, Lawrence Ellison, Lee Shau kee, Li Ka-shing, Liliane Bettencourt, Michael Bloomberg, Michael Dell, Michael Otto, Michele Ferrero, Mikhail Prokhorov, Mohammad Al Amoudi, Mukesh Ambani, Paul Allen, postaday, Prince Alealeed Bin Talal, Prince Alwaleed Bin Talal Alsaud, Ronald Parelman, S Robson Walton, Sergey Brin, Stefan Persson, Stephen Ballmer, Susanne Klatten, Theo Albrecht, Warren Buffett

Mohnish Pabrai

March 6, 2011 1 Comment

Mohnish Pabrai is an Indian-American businessman and deep value investor.He is the managing partner of the Pabrai Investment Funds, which he founded in 1999.He is also a member of the Young President’s Organization (YPO) and a charter member of The Indus Entrepreneurs (TIE).

Monhnish Pabrai first trained as a computer engineer. He then spent nearly two decades in the tech field.In 1990, he quit his job working as an engineer for Tellabs in Chicago and abandoned his master’s thesis at the Illinois Institute of Technology to launch TransTech, an IT consulting and systems integration company, which he funded with $30,000 from his retirement account and $70,000 from credit cards.His father encouraged him in the endeavour,saying that it was the right thing to do as staying at Tellabs and following the staid boring corporate path was high risk. Starting a business on the other hand was low risk, could give high returns and high adventure. As Monaish was single at the time there were few complications and in the worst case, he would lose everything ,which wasn’t much anyway,and could declare personal bankruptcy and start over. By 1999, Transtech, which had grown to 200 employees and $30 million in revenues, held no thrill. So he sold it. And during the tech boom,he started another company, internet incubator Digital Disrupters, which had a very painful and swift demise due the tightening of capital markets .In 2000, he sold TransTech to Kurt Salmon Associates.During late 1999, with nine other investors contributing $100,000 each,Mohnish started Pabrai Funds with $1,000,000 in assets. Pabrai Funds was modelled on the original “Buffett Partnership.” Read more of this post