Over the past few years, corporate buyouts have been highlighted in the news because they are so plentiful. Many corporations within Orange County and across the nation have faced buyout situations and engaged in a new era of business structuring.
Currently, Dell finds itself facing a buyout. The company, founded by Michael Dell in 1983 as a start-up company within the small confines of his Texas college dorm room, is searching for extra consideration in a leveraged buyout. Dell himself returned to the company six years ago to once again take the helm, but that still hasn't remedied its decline.
Apparently, Microsoft, struggling in its own right, has offered some financial help with the situation. The deal could approach $25 billion, a significantly large number, but in the recent past Dell was actually worth several times that much. However, shifts in the marketplace caused the company to miss out on increasing mobile device sales and its PC sales are down 21 percent in a year.
Buyout agreements can contain many components, but they commonly address who can purchase shareholders' stock, whether the company must buy out a shareholder, how the value of a shareholder's interest is measured, and all payment terms to complete the process. The agreement decides if a company must buy out a departing shareholder, or if it has the option and right to buy out a shareholder when an event, such as death or bankruptcy, occurs. It skillfully prevents an outside buyer from gaining corporate interest.
When determining if a buyout is the appropriate option for handling a departing shareholder, a qualified business attorney in Orange County can be extremely useful in providing advice. It is also beneficial to have an attorney craft bylaws when setting up a company so that limitations and guidelines are already in place to govern a shareholder's ability to sell or transfer shares when leaving the business.
Source: Bloomberg Businessweek, "Some of Dell's Stumbles Were Purely Financial," Roben Farzad, Jan. 24, 2013