'Big Embarrassment' For Morgan Stanley

Morgan Stanley HQ

Morgan Stanley, once the preferred takeover adviser of Dell Inc., missed out on a role on the biggest technology buyout since the financial crisis, depriving the firm of a share of more than $100m in fees.

The bank trails only Goldman Sachs in advising on technology deals over the past 15 years, according to data compiled by Bloomberg.

Until now, Morgan Stanley was Dell’s most used M&A adviser and provided counsel on the biggest deal in the personal-computer maker’s history - the $3.6bn purchase of Perot Systems Corp. in 2009, the data show.

Silver Lake Management LLC and Michael Dell have agreed to buy the Round Rock, Texas-based company in a deal valued at $24.4bn. Goldman Sachs won a role providing guidance to Dell, while JPMorgan Chase & Co. and Evercore Partners Inc. (EVR) advised the special committee of the board. That makes Morgan Stanley the only one among the top four advisory banks that isn’t involved.

'Missing out on it is a big embarrassment for Morgan Stanley even though it won’t hurt the bank’s bottom line in the long run', said Brad Hintz, bank analyst at Sanford C. Bernstein & Co. in New York. 'A large deal like this is like a delayed Christmas gift for Wall Street'.

In the meantime, Bloomberg reports that the Dell deal may encourage more private-equity firms to pursue deals, heralding a rebound for mergers and acquisitions after volume shrank last year.

The leveraged buyout would be the biggest since at least, according to data compiled by Bloomberg. The size of the deal probably will amplify potential buyers’ confidence, spurring them to tackle more targets, said Sandler O’Neill & Partners LP’s Devin Ryan.

'LBO activity historically has led the M&A markets more broadly', said Ryan, an analyst with the New York-based boutique investment bank. 'More LBOs generally spark more strategic activity as well - it all kind of ties into together'.

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