Absent a new voting structure, it appears the LBO will not get done at $13.75 per share--especially taking into consideration where Dell's stock traded to begin the week. And Silver Lake's refusal to increase its bid to the $14 per share that likely would have sealed the transaction by now demonstrates that this is one private equity firm that wants to act with restraint and not just throw limited partners' money after what might turn out to be a troubled deal.
Private equity shying away from the big deals of yore has not stopped some executives from seeking out sponsors with LBO aspirations and extensive operational expertise.
Richard Schulze shopped his best intentions for Best Buy (BBY) to private equity firms and lenders galore, only to strike out. It is likely private equity would have never even considered taking the Minnesota-based electronics retailer private absent of the founder's call to arms. Similarly, the Dell LBO would be totally impossible without the PC maker's founder.
In the meantime, all of this isn't to say PE has been totally out of the M&A picture in 2013: Worldwide, and in the Americas, PE deal activity grew 23%, according to data released last week from Reuters, while total M&A has fallen globally by 12%. A bright spot for PE, and for the withering M&A scene, has been consumer deals, which are up so far this year. Within that space is a lesson from an operational mastermind in a mature industry that acted with founder mentality that ought not get lost amid the $40 billion in drug and advertising transactions announced Monday.Richard Baker has carried out a plan of corporate development for years, putting three retail titans together into one entity that has it on the precipice of becoming a dominant North American department store player. Baker's 2008 deal to buy Canada's Hudson's Bay dovetailed with his private equity firm NRDC Equity Partners' ownership of Lord & Taylor (acquired in a $1.2 billion 2006 deal). From Hudson's Bay, he spun out, in 2011, underperforming leases in Zellers stores to American megastore Target (TGT), which paid almost $2 billion for its big push into Canada. A 2012 initial public offering helped Baker shore up his retail empire with more cash, building to his plan to acquireSaks (SKS) in a deal worth $2.9 billion, including debt, announced earlier this week. There are few crown jewels in the department store real estate game left for Baker to buy.
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