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65% of Dell shareholders voted for the deal, in what seemed to be a fair process. (Michael Dell wasn't allowed to vote his own shares, and non-voters counted as

65% of Dell shareholders voted for the deal, in what seemed to be a fair process. (Michael Dell wasn't allowed to vote his own shares, and non-voters counted as voting against.) Any time people vote someone is "forced" to accept an option they voted against, but the process can still be fair. If equity holders usually get screwed by leveraged buyouts then they should start voting against them. I agree with the author that having a judge determine the correct price seems perverse.

slededit 10y ago
Not really a fair number to quote when Fidelity accidentally voted a huge number of shares in favor.
- Falcon9 10y ago
  As noted in the footnotes, at a cost of $160MM to them based on this verdict! Oops indeed.
newjersey 10y ago
This came up in the wherein discussion. Should it be legal for 50%+ to see over the rest? Should minority owners have any other recourse? I get that this isn't a democratic government where we have to guarantee full protection under the law for an individual but what I'd the 51% decides the sale price should be 1picodollar per share and then the new owner awards the 51% with shares effectively giving back their ownership? I imagine this won't happen in real life but just as a thought experiment... should it be OK?
- belltaco 10y ago
  There are several existing laws that can be applied in a scenario like that, e.g. anti-syndicate, anti-collusion, anti-bribery laws etc.
  - newjersey 10y ago
    They all sound like criminal charges? I anal but I was thinking more of civil remedies if possible.
- yellowstuff 10y ago
  No, I don't your example is OK. I don't know what law it violates, but I doubt it would be allowed. And there are many real world examples where management acquired a company cheaply because they hid the true value of the company, or didn't pursue competing offers. Acquisition by management is super conflicted and should receive a lot of scrutiny. However, according to the article the judge thought the process was fair, that there was no way to sell the company for a higher price, and shareholders voted for the deal while possessing all relevant information. I think that given those facts the deal price should be considered fair.
  - derefr 10y ago
    > hid the true value of the company Boy, that's certainly a can of worms. Is someone who builds up a great company with low equity, then intentionally runs it badly to lower the share price, acquires more shares, and then runs it well again, guilty of something? Or is that just how incentives work—they felt like they needed more investment in the business before they could give their all to it?
- jrumbut 10y ago
  This is why picking stocks is more difficult than looking at a PE ratio. Does the board of directors contain competent and trustworthy people? Does an activist investor wield outsize influence? Are buyout rumors circulating? Hard to know these things, that's a big part of why index funds are so popular.
- mannykannot 10y ago
  This is not just a reply to you, but to everyone who is making a similar point: if you own a minority share in a company, you should realize that you can rarely call the tune. There are a great many issues in the running of a company that you are not entitled to dictate, and this is one of them. What is the better alternative to '50%+ seeing over the rest'? <50% seeing over the rest? If so, which minority? Furthermore, even a passing acquaintance with human nature should lead you to the conclusion that people will routinely claim they are being screwed even when they are not.

slededit 10y ago

Not really a fair number to quote when Fidelity accidentally voted a huge number of shares in favor.

Falcon9 10y ago
As noted in the footnotes, at a cost of $160MM to them based on this verdict! Oops indeed.

newjersey 10y ago

This came up in the wherein discussion. Should it be legal for 50%+ to see over the rest? Should minority owners have any other recourse? I get that this isn't a democratic government where we have to guarantee full protection under the law for an individual but what I'd the 51% decides the sale price should be 1picodollar per share and then the new owner awards the 51% with shares effectively giving back their ownership? I imagine this won't happen in real life but just as a thought experiment... should it be OK?

belltaco 10y ago
There are several existing laws that can be applied in a scenario like that, e.g. anti-syndicate, anti-collusion, anti-bribery laws etc.
- newjersey 10y ago
  They all sound like criminal charges? I anal but I was thinking more of civil remedies if possible.
yellowstuff 10y ago
No, I don't your example is OK. I don't know what law it violates, but I doubt it would be allowed. And there are many real world examples where management acquired a company cheaply because they hid the true value of the company, or didn't pursue competing offers. Acquisition by management is super conflicted and should receive a lot of scrutiny. However, according to the article the judge thought the process was fair, that there was no way to sell the company for a higher price, and shareholders voted for the deal while possessing all relevant information. I think that given those facts the deal price should be considered fair.
- derefr 10y ago
  > hid the true value of the company Boy, that's certainly a can of worms. Is someone who builds up a great company with low equity, then intentionally runs it badly to lower the share price, acquires more shares, and then runs it well again, guilty of something? Or is that just how incentives work—they felt like they needed more investment in the business before they could give their all to it?
jrumbut 10y ago
This is why picking stocks is more difficult than looking at a PE ratio. Does the board of directors contain competent and trustworthy people? Does an activist investor wield outsize influence? Are buyout rumors circulating? Hard to know these things, that's a big part of why index funds are so popular.
mannykannot 10y ago
This is not just a reply to you, but to everyone who is making a similar point: if you own a minority share in a company, you should realize that you can rarely call the tune. There are a great many issues in the running of a company that you are not entitled to dictate, and this is one of them. What is the better alternative to '50%+ seeing over the rest'? <50% seeing over the rest? If so, which minority? Furthermore, even a passing acquaintance with human nature should lead you to the conclusion that people will routinely claim they are being screwed even when they are not.