How the biggest tech deal in history came together
The $65.7 billion deal will create one of the largest private companies in the world.Although talks between the two companies stepped up in the past five months, the deal can trace its origins to Dell's buyout two years ago.
And, like with many company sales these days, there was an activist investor in the background.
Ratcheting up pressure
The record-setting deal can be traced back to 2013 when Michael Dell and private equity firm Silver Lake took Dell private for $24 billion.That's when founder Michael Dell was able to start transforming his company from a PC-only company to a broader tech firm, without the pressure of meeting quarterly goals.
The timing for Dell and EMC was "perfect", according to one person familiar with the deal.
Dell was in better shape financially following its buyout and Michael Dell was looking for his next step, right when EMC was looking at making a change.In the spring of this year JPMorgan got involved as an adviser to Dell, according to people familiar with the matter.
JPMorgan CEO Jamie Dimon met with both Michael Dell and Silver Lake managing director Egon Durban, and the Dell board started looking seriously at a deal.
How to finance the biggest tech deal in history
The biggest challenge to getting a deal agreed was the huge financing package required to make the deal happen.
JPMorgan, which is the lead financial adviser to Dell, spent much of the summer assuring people that it was doable.Advising EMC on the transaction was Morgan Stanley.
In early September, Dimon met with EMC's board to ensure directors that the financing was in fact achievable.Then, in the six weeks that followed, a handful of other banks came on board and committed financing. Credit Suisse stepped up, a fact reflected by their role as global financing coordinators along with JPMorgan. A long list of banks also committed to the financing, including Barclays, Bank of America Merrill Lynch, Citigroup, Deutsche Bank, Goldman Sachs, and RBC.
It amounts to one of the largest financing commitments for a technology transaction in history. The deal is big news for Wall Street: it could mean up to $700 million in fees for the investment banks involved in the deal - and for the tech industry.
The deal is expected to close between May and October 2016.
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