Just over two years ago, Tom Sweet, CFO of Dell Technologies, was part of the executive team that oversaw the biggest technology merger in history. Dell, the computer technology company, borrowed $67 billion to buy enterprise storage business EMC in a deal that completed in September 2016.
Sweet, as Dell’s CFO, had the daunting task of arranging the financing structure for the transaction – something he did in conjunction with Dell’s private equity partner, Silver Lake. “It was a pretty interesting challenge,” he recalls, “in terms of how you would put together a financing structure that made sense and create an offer for shareholders that was so compelling that they would vote for the merger.”
It took more than a year to pull the financing structure together, with Sweet often working 70 to 80 hours a week during that time. “It was a lot of hard work, but there was a lot of interest from banks and institutions around the credit quality of the company,” he says. “They saw the opportunity to put capital to work in what they thought was interesting technology play.”
As a leader, Sweet admits that he relied heavily on his team to get through the process. “We wouldn’t have got this done if it was just down to me,” he says. “It was a huge team effort. Hence his advice to other CFOs who might be able to embark on a mega merger is to get the right people in the right places. “It all starts with having a great team,” he says, “and having people in the team who can help you to shape this and provide a level of expertise, leadership and support that frees you up to not only to deal with the transaction, but also the other aspects of how you run the day-to-day business.”
In Sweet’s view, successful leadership “starts with talent and empowering your team”. He continues: “Then you need to have the appropriate checkpoints and monitoring capabilities to make sure that everyone stays aligned.”
It’s still early days, but the ambitious merger already appears to be paying off. The enlarged company, which is known as Dell Technologies, has paid down around $15 billion of debt since the merger through a combination of revenue growth and selling off non-core businesses. Going forward, it has set its sights on being the “essential infrastructure company” that will help customers to realize their digital future. In other words, it will provide the technological platforms that enable online retailers, financial institutions, car manufacturers, utility providers and other businesses to innovate and disrupt the market.
“The technology cycle that we’re in is pretty interesting in terms of CEOs thinking about technology and data as a strategic element of their success,” says Sweet. “They are willing to invest in it if you can show them what is possible.”
Today the spotlight is shining on the world’s biggest tech companies for a variety of reasons, from how they treat their workers through to how they look after their customers’ data and how much tax they pay. There is even rising concern in some quarters that the tech giants are more powerful than many countries. Is this an issue on Sweet’s radar?
“What’s on my radar is ensuring that we’re good corporate citizens,” he responds, “that we pay our appropriate share of taxes, that we abide by the local laws and regulations, and that we’re respectful of the cultures that we operate in. I don’t think we perceive ourselves as being more powerful, or more influential, than certain countries. That’s not what we are. We prefer to grow our business, be good citizens and build strong teams around the globe, which are enabling our customers to be successful. That’s how we’re thinking about our business.”
Sweet has notched up what he describes as “an incredible 21 years” at Dell Technologies and works closely with the company’s inspirational founder, whom he describes as “fun to work with”. So what can the rest of us learn from Michael Dell?
“Michael is extraordinarily visionary in terms of where he wants to take the company,” Sweet explains. “And he’s extraordinarily passionate about both the business and the people. Also, he’s not afraid to take some risks because he’s an entrepreneur at heart. That’s why he will roll the dice and say, ‘Let’s go and do a $67 billion merger!’”
Asked how his role in the EMC merger enhanced his own capability as a leader, Sweet responds: “All these experiences mold and shape you and cause you reflect on what could you have done better and what you could have done differently. Much of what you do as a CFO is around enablement – enablement of the business, enablement of teams, enablement of the strategy of running a business. Ultimately it comes down to how talented is your team and are your developing your talent appropriately?”
