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Dell Inc. is currently interviewing i-bankers and tech veterans to lead its M&A activities, the Wall Street Journal reported, citing unnamed sources.
The Red Rock, Texas-based computer maker could certainly use some pop in its business: its stock has lost 38% over the past year and its market share of the U.S. PC market fell four percentage points in the first quarter 2009 from a year earlier, to 26.3%, according to IDC. HP topped the U.S. market with a 27.6% share in the first quarter.
Historically, Dell has not been much of a dealmaker. Last year, it made one acquisition, according to data from Thomson Reuters, paying $155 million for MessageOne Inc., a software-as-a-service, enterprise e-mail management, archiving and storage company co-founded by Adam Dell, brother of Dell founder Michael Dell. In 2007, Dell was busier, striking seven deals, including the $1.4 billion deal for EqualLogic Inc., Thomson Reuters data showed. The company bought the Microsoft IT consulting and solutions segments of Allin Corp. for $12 million earlier this year.
The Journal reported that the M&A chief position will be a new one at Dell, but it's not uncommon for companies in the technology sector to handle their own M&A because acquisitions tend to be small and all cash. By keeping advisory activities in-house, companies can cut out fees that normally run around 0.5% of a deal's value.
The most prominent example of the in-house banker in the tech industry may be Safra Catz, the current co-president of Oracle. In 1999, CEO Larry Ellison lured her away from Donaldson Lufkin & Jenrette, Oracle's investment bank at the time. Mr. Ellison has unquestionably put her expertise to use over the years. Indeed, Oracle pulled off its $8.5 billion purchase of BEA Systems last year without the use of a financial adviser.
Given the fallout in the investment banking industry and the increased scrutiny over bankers' compensation, Dell likely has a plethora of highly qualified applicants to choose from.
And given Dell's $9 billion cash stash at the end of January—up 14% from a year earlier—the new hire should have the means to pull off any number of deals.
Of course, the real question all of this begs is: What should Dell buy?
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