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Dell 'deal' more about questions than answers

January 15, 2013: 1:30 PM ET

DellWhile waiting for the Dell buyout that may never come...

FORTUNE -- It's been nearly 24 hours since Bloomberg first reported that Dell Inc. (DELL) might go private, in what would be the largest leveraged buyout since before the financial crisis. A few developments and thoughts since we last discussed:

1. Bloomberg didn't name the two interested private equity firms, but subsequent reports suggest they are Silver Lake Partners and TPG Capital (which means I'm a good guesser). Silver Lake makes sense since it's the largest PE firm out there dedicated exclusively to technology, and also because it has led large club deals in the past (such as Seagate and SunGard). TPG also has some major tech history, lots of available capital and a shared Texas heritage with Dell.

2. The very most I could see Silver Lake and TPG contributing is $3 billion, which would include some co-investment from limited partners. That would leave around a $2 billion gap --assuming Michael Dell rolls over his personal which most likely would be filled by sovereign wealth funds or Canadian pensions.

The former is more likely, because they: (1) Tend to write larger checks; (2) Don't usually demand a seat at the table; (3) Have less institutional memory of lousy mega-LBOs of yesteryear. Names like China Investment Corp., Government of Singapore Investment Corp., Temasek and/or Abu Dhabi Investment Authority.

3. Worth noting that I've spoken already with a couple large limited partners, none of whom had yet been asked for co-investment.  I guess that a deal could be announced before such calls are placed -- some reports suggest a press release later this week -- but that seems to be putting the cart before the horse a bit. Or perhaps the firms are only working with a single LP who simply wasn't on my call-list.

4. There are some rumors that MSD Capital, the investment firm that manages Michael Dell's money, somehow could be involved. Would mean that Dell is doubling or tripling down on his own company, but that also could help fill the equity gap.

5. David Johnson yesterday showed up for his first day of work at The Blackstone Group (BX), after spending the past three years as Dell's vice president of strategy. If the Dell buyout talk is true, then his timing is outright weird. No way Silver Lake and TPG have put this thing together in just a couple weeks, which means Johnson likely would have known about it before giving notice (assuming reports are true of a pending announcement). But why leave Dell just before the buyout? Wouldn't he stand to gain more by sticking around? Or did he think the going-private talk was just that -- talk. And where is Blackstone in all of this? Word is they have no interest, despite now having someone in house who should know Dell better than does anyone at Silver Lake or TPG. Again, just odd...

6. One quirk of this deal would revolve around Dell's $11 billion or so of cash on hand, which could help assuage banker concerns. The trouble is that most of it is held overseas, and bringing it back stateside would subject Dell to a massive tax bill. So expect that a lot of the leveraged financing would be done in Europe or Asia or wherever else Dell's bank accounts are.

7. All of the above explains how a Dell take-private could get done, but I stand by my initial skepticism. I got asked earlier today on CNBC to give odds of a successful deal, and I said 20%. Wilbur Ross was more positive, putting it at 50-50. Full video below:

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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