What Silver Lake Looks For in IPO Candidates

Talk about one of your biggest learning experiences.

I played a key and detailed role in our first big buyout, which was the take-private of Seagate Technologies in 2000. As part of that we also bought a company called Crystal Decisions. I think the Seagate deal was one of the best hardware deals ever done, which we did as a firm. The Crystal piece of it that we separated out of Seagate and ultimately sold to Business Objects was, I think, one of the best software outcomes ever. So I think being a part of this firm, where we've been good at creating unique, almost groundbreaking transactions has been a great learning experience.

Was there anything specific you learned in the Seagate deal that's stuck with you?

In the Seagate deal and a lot of other situations, I think there can often be incredible things that management teams are working on and trying to execute that the public markets don't necessarily give them credit for. One of the things that we identified in Seagate and Crystal was that there were some really compelling pieces of those businesses that the public investors just didn't appreciate and weren't interested in trying to understand."

Those two businesses were poorly viewed by Wall Street when we got involved, even though a lot of their transformation, which enabled the great parts of those companies when we got out four or five years later, was already happening. With Seagate, they were completely changing the way they were designing and manufacturing disk drives and standardized the process so that they could do what mattered in the industry ten years ago, which was be first to market with new disk drives. You probably remember that you used to care whether you had a 30 GB or 60GB disk drive. They spent a number of years and a lot of money totally changing their manufacturing processes.

Seagate told TheStreet about it and no one cared. It took them a while to do it and they just emerged as a different company three or four years later ... I think that investors and especially public investors want things to happen quickly and want to see progress. Ultimately, a year or two is not really that long in the life of a company trying to undergo transformation.

How would you describe the current environment?

I think it's a very interesting and strange environment right now, with incredible growth in some sectors and incredibly low public market valuations in others. It's a great time to be a tech investor in both public and private markets, and it's a good time to have and develop a unique perspective. At Silver Lake Sumeru, we are having a good time trying to make sense of it all.

-- Written by Antoine Gara in New York

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