The Hidden Deal Maker Behind the Dell Buyout - Wall Street Journal

By SHIRA OVIDE And ANUPREETA DAS The buyout of Dell Inc. is a breakout moment for Egon Durban. Mr. Durban, a 39-year-old managing partner at private-equity firm Silver Lake Partners, led the $24.4 billion deal reached Tuesday to take the computer maker private. If approved by Dell shareholders, the deal would be the largest corporate privatization since the financial crisis. It would also fuel Mr. Durban's reputation as both savvy about technology and agile with Wall Street number-crunching, if he and his fellow buyers succeed in reviving the company. Not all of his deals have been hits. Yahoo Inc. wasn't persuaded to accept a 2011 deal Mr. Durban spearheaded to buy all or parts of the Internet company, and investments he pursued in Zynga Inc. and Groupon Inc. when they were private haven't lived up to expectations. To date, Mr. Durban's calling card is Silver Lake's 2009 deal to buy a majority stake in video-calling company Skype for just over $2 billion in cash and loans, including $975 million from the private-equity firm's funds. When Microsoft Corp. agreed 18 months later to buy Skype for $8.5 billion, the deal made Silver Lake and other Skype investors a multibillion-dollar profit. After Mr. Durban negotiated to buy most of Skype from eBay Inc., he was instrumental in finding ways to clean up the company and make it more valuable, according to people familiar with the transaction. He negotiated to hire a well-respected new chief executive, Tony Bates, from Cisco Systems Inc., helped strike deals for Verizon Wireless and Facebook Inc. to incorporate Skype into those companies' services, and settled an intellectual-property lawsuit that had spooked other potential Skype buyers. "They added a lot of value to Skype and they were excellent owners, and Egon personally is world class at what he does," said eBay Chief Executive John Donahoe, who negotiated with Mr. Durban on the Skype purchase. Mr. Donahoe said he was so convinced Mr. Durban and Silver Lake would improve Skype's operations and valuation that he asked for eBay to continue to own a stake in Skype. Mr. Durban agreed, and eBay wound up owning 30% of Skype. That deal also helped cement Mr. Durban's relationship with senior Microsoft executives, people familiar with the matter said. Microsoft was part of the Silver Lake group that attempted to do a Yahoo deal, and is helping fund the Dell buyout. Timeline: Dell's Ups and Downs Working mostly out of Silver Lake's offices along Sand Hill Road in Menlo Park, Calif., the nexus of Silicon Valley investors, Mr. Durban conducts meticulous research on potential deal targets, according to people who know him. When Mr. Durban was considering an investment in Hollywood talent agency William Morris Endeavor Entertainment, he read books by film-industry executives Lew Wasserman and Michael Ovitz, and scoured Hollywood insider blogs to learn about the movie business, said Ari Emanuel, co-chief executive of the agency. Silver Lake purchased a 31% stake in WME. Venture-capital investor Marc Andreessen, an investor in Silver Lake's Skype transaction, described Mr. Durban as a "deal junkie" and the pair trade emails at all hours about tech topics. People who have worked with Mr. Durban also said he urges investment partners to make calculated financial decisions rather than emotional ones. On the phone, "there is about a nanosecond of pleasantries [with Mr. Durban], and then it's straight into the deal," said Mark Wiseman, chief executive of the Canada Pension Plan Investment Board, which manages assets of the 170 billion Canadian dollar (US$170.6 billion) pension plan for Canadian workers. CPPIB has invested more than C$1 billion with Silver Lake since 2004, and co-invested with the firm on the Skype deal. When Skype was weighing the sale to Microsoft, Mr. Andreessen said he and his investing partner, Ben Horowitz, opposed the sale and instead wanted to take the company public. Mr. Durban walked to Andreessen Horowitz's offices—right down the street from Silver Lake's in Menlo Park, Calif.—for some straight talk. "I'm just going to give it to you like a cold shot of vodka," Mr. Durban told the pair, according to Mr. Andreessen. "We're going to sell the company." Messrs. Andreessen and Horowitz agreed, and Mr. Andreessen now says selling was the right call for everyone involved. Mr. Andreessen, a board member of Dell rival Hewlett-Packard Co., declined to discuss the potential Dell buyout. Mr. Durban's less successful investments include Silver Lake's stock purchases in Groupon and Zynga when the Web companies were still private. The investments combined represent a small piece of Silver Lake's portfolio, but each company now is trading well below the value at which Silver Lake invested, according to people familiar with the investments. Mr. Durban is also known for a quick wit. To describe an awkward presentation several years ago, he coined the word "fiaster"—a combination of "fiasco" and "disaster." Mr. Durban sprinkles the word into his conversations, and "fiaster" even caught on among some Silver Lake employees, people familiar with the firm said. Mr. Durban, who joined Silver Lake just after the firm was founded near the height of the dot-com frenzy in 1999, opened Silver Lake's first London office in 2005 and stayed there for nearly five years. He had been a Morgan Stanley analyst and then investment banker. Just over a year ago, Mr. Durban was among a quartet of Silver Lake managing directors promoted to managing partners and given more day-to-day responsibility at the firm. People familiar with Silver Lake say Mr. Durban and the rest of the younger generation of Silver Lake Partners cooperate well in running the firm, along with co-founder Jim Davidson. When Silver Lake purchased a stake in WME, Mr. Durban joined the agency's executive committee. In the thick of Dell-buyout talks last month, Mr. Durban watched his first telecast of the Golden Globe awards show, and he was keeping score. "He was emailing me about how the WME clients were doing," Mr. Emanuel said. "He was proud." News of the Dell buyout negotiations and Silver Lake's involvement broke the next day. Write to Shira Ovide at shira.ovide@wsj.com and Anupreeta Das at anupreeta.das@wsj.com Corrections & Amplifications Egon Durban is the Silicon Valley deal Maker that led the $24.4 billion transaction for Silver Lake Partners. An earlier version of this article misspelled his first name. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNG-aj9jfvRYZrRlHHBFk1mWbZaAsw&url=http://online.wsj.com/article/SB10001424127887324445904578284011243534432.html

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