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June 20, 2016
martinwolf Transaction Analysis
Dell Sells Software Unit to Elliott Management and Francisco Partners
 
Financial Information*
  • Enterprise Value                                        $2+ billion
Transaction Facts
  • Hedge fund Elliott Management and private equity firm Francisco Partners together announced today that they were purchasing the Dell Software Group, a collection of software providers including security provider SonicWall and IT manager Quest Software.
  • The Software Group provides analytics, database management, data protection and other services to corporations. Dell had looked to sell the division as one of its ongoing efforts to raise cash to support its acquisition of EMC announced late last year.
  • The deal is the one of the first and largest transactions executed by Evergreen Coast Capital, a division of Elliott Management created to function more like a traditional private equity firm by buying companies outright or lending them money.
Dell Keeps Its Eye On The Prize As EMC Deal Continues
  • Cash is Key: Dell has undertaken numerous initiatives to fund its debt-intensive takeover of EMC Software, including the sale of its IT Services subsidiary Perot Systems to NTT Data for $3 billion in March and the sale of $20 billion in secured bonds in May. The company also proceeded with the IPO of its cybersecurity unit SecureWorks in April (in the first tech IPO of the year), though SecureWorks CEO Mike Cote said the IPO had nothing to do with the EMC deal. 
  • A Bird in the Hand: Dell acquired Quest Software and SonicWall in 2012. Dell initially paid $2.4 billion to acquire Quest Software, and though SonicWall's price was undisclosed, media reports at the time pegged the sale at $1.2 billion. 
  • Expanding Beyond Traditional Activism: Elliott Management, best known for its activist shareholder positions, has in the past explored limited private equity activities. But the company has indicated it will be increasingly active in this space, building a team to focus on traditional private equity offerings and outright acquisitions.
  • Private Equity Continues to Flex Its Muscles: This is the latest big play by private equity firms in the tech space, particularly concerning software. Earlier in June, Vista Equity Partners bought marketing automation software provider Marketo for $1.8 billion, while Thoma Bravo acquired data analytics firm Qlik Technologies for $3 billion.
For more information about this transaction,  click here to read the press release.

*Financial information was not disclosed, but media reports estimated the transaction size to be more than $2 billion.

martinwolf was not the advisor in this transaction.

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With offices in the San Francisco Bay Area, martinwolf is a leading M&A Advisory focused on middle market companies in the IT Services, IT Supply Chain, IT-Enabled Business Process Outsourcing and Software as a Service (SaaS) space. Since 1997, our team has completed more than 140 transactions in nineteen countries and sold seven divisions of Fortune 500 companies. 

 

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