When Dell purchased email archiver MessageOne for $155 million today, the computer giant didn’t have to welcome the small startup into the family. MessageOne has been in the Dell family from the start, literally.
MessageOne was co-founded by Adam Dell, brother of Dell founder Michael Dell. Michael Dell also had a financial interest in MessageOne. The Dell founder, his wife, parents, and a trust for his children are investors in two investment funds that backed MessageOne. Adam Dell manages the funds, and served as MessageOne’s chairman.
So when the smoke clears after the deal, Adam Dell will receive around $970,000, Michael Dell, Susan Dell and their children’s trust will receive a total of around $12 million; and Dell’s parents will receive around $450,000. According to the press release Dell issued announcing the deal, the $12 million paid Michael and Susan Dell and their children will be donated to charity.
To the Dells’ credit, they disclosed these numbers in the press release. The company also claims Michael Dell was not involved in the negotiations for MessageOne. Dell’s directors – excluding Michael Dell and CFO Don Carty – handled negotiations and received an opinion from Morgan Stanley & Co. that the price was fair to the company.
You can expect Michael Dell to be especially careful, considering the company had some accounting problems with the SEC in recent years that were part of the reason the founder came back to replace Kevin Rollins as CEO. And the acquisition will have to pass muster with regulatory agencies. Still, the results of this deal will be watched especially closely over the next few months. While Dell can easily justify acquiring email archiving and storage software as a service (SaaS), there will be questions about whether the price was right — even if it is merely tip money compared to the $1.4 billion paid for EqualLogic.
So if Dell doesn’t see a quick boost from MessageOne’s products and services, Michael Dell will have explain more than why the integration is taking longer than expected. He’ll have to convince investors and skeptics that the deal wasn’t just a nice payday and perhaps a lifeline for his brother’s company.