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Corporate Partners Rich Capelouto, Jen Hobbs and Andy Keller were quoted in an article in Law360, “Anatomy Of A Merger: Ingenuity Helps Dell Seal $67B EMC Buy,” on the creative structuring of the private equity-backed leveraged buyout. Rich explained that the debt financing for the potential deal became just one layer of complexity as it became clear that Dell Inc. was set on also snapping up publicly traded VMWare Inc., a subsidiary of EMC Corp., without increasing its financing package or affecting the unit’s cash flows. “It created an interesting situation or issue to be solved: How do you pay for EMC given that a large part of EMC's value is its stake in VMWare?” said Rich.

Jen was also quoted regarding the record size of the debt financing and the importance of keeping it flowing in tandem with the various other pieces of the deal. “Like any leveraged buyout, all these pieces — the debt, the acquisition structure and terms, planned divestitures, the equity arrangements — all have to work together. Just by definition of getting bigger, you get more complicated because you have to do more complex things with the tranching and the debt. Making the pieces fit together and making it work seamlessly requires people who can work together across disciplines, across offices,” she said.

Andy explained that the Dell deal was unique because it was a privately held company creating a tracking stock tied to the publicly traded stock of its target's subsidiary. “Prior tracking stocks had always just been with respect to a wholly owned subsidiary or division of a company,” he said. “That makes this tracking stock interesting from that perspective.”

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