Carl Icahn is aggressively trying to kill Michael Dell’s attempt to buy back his own company. Icahn’s efforts were significantly hampered this week when ISS, a large stockholder advisory firm, came out in favor of Dell, arguing that it eliminated risk and implying that Icahn’s deal did anything but. This makes Icahn’s success unlikely, particularly given how he destroyed TWA (it’s not like any of the employees will stay if they have the choice should he win).  

But let’s say Icahn gets really lucky and actually wins, puts a board in place that figures a way to leverage Dell to the hilt and pay the premium he promises to the stock holders. What could Michael Dell do? He won’t, in that case, be CEO anymore, and Dell the company will be little more than a collapsing shell, so pulling a Steve Jobs and coming back probably won’t work – even if Icahn allowed it, which he wouldn’t.   Given last month’s near secret loss in the Delaware Chancery Court, Icahn’s success is anything but certain, but what if hell froze over and Icahn won this time? 

Michael Dell could form a new Dell.  

 
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Building a New Dell

As Dell’s largest stockholder, Michael Dell would be the biggest beneficiary of Icahn’s move, making far more than Icahn himself likely will. The employees would be streaming out of the failing result of the company in droves and certainly be more than willing to go to work for Michael Dell again. The whole point of going private was to restructure Dell into a new company, so how much easier might it be to create a new company from scratch with the billions Dell got from Icahn? It is generally far easier to build from scratch than it is to restructure, and given that the assets Dell wants to retain are people, they would be more than happy to continue to work for him.  

While other firms could certainly bid against Dell for some of the companies that Icahn would be attempting to sell off, Dell would know what key employees from each he would need. Those key employees would assure that he got most of the skills he needed, and that whatever a competitor got was, well, crap in the process. There’d be little risk of conflict given Dell would have separated from the company by this point and he would have been outspoken about how bad a deal the Icahn plan was for all of the stakeholders.    

In addition, he could build new headquarters more advanced than even Apple’s recent plans, because he’d start with no physical assets or simply lease. He’d likely start buying an undervalued company to get essential services and then, from there, build a firm unhindered by Dell’s current structure. Granted he’d have to build a new brand too, but it is hard to separate the guy who named his company after him from that brand. And, with most of the top sales people, engineers and Microsoft (which apparently didn’t care for Icahn much either) in his corner, he could create something very unique and more tightly blended with Microsoft than he can now.  

But in the end, this would give Dell a chance to fully reimagine a company based on the world the way it is, rather than struggle to change an existing company, and it would start out private so it would avoid virtually all of the headaches Dell currently has with Icahn. If done right, Dell could make Icahn’s life a living hell, ending up more liquid than Icahn – largely in thanks to Icahn’s own money.  

Wrapping Up: The Path Not Taken

This outcome is extremely unlikely. With the court and ISS coming out effectively against Icahn, and most Dell investors not being idiots who prefer promises from the guy who killed TWA over hard cash, Icahn’s chances of winning this are pretty much nonexistent. Still, much of his effort appears to be based on thinking Michael Dell would be afraid of losing should Icahn win. I think Michael Dell could actually win bigger at Icahn’s expense. Given how many jobs Icahn has destroyed over the years, I can’t but hope a little for that kind of poetic symmetry.