* Dell Acquires EqualLogic, But NTT’s Acquisition Of Verio Still The Largest Cash Deal In Internet History

There should be a record book for this stuff. Oh yeah, there is: Wikipedia.

I occasionally see some “fact” that cries out for correction. Maybe it’s because some facts are difficult to uncover. On 11/06/07, Dan Bricklin wrote:

“Yesterday Dell announced that it was acquiring EqualLogic for about $1.4 billion — reportedly the largest cash acquisition of a venture backed startup.”

Hmm. I worked for Verio for four years. Verio was a venture backed startup. In 2000, Verio was acquired by NTT Communications for $6 billion cash. (NTT wrote a check for “only” $5.5 billion because they already owned 10% of Verio.) I’m pretty sure that’s still the largest cash deal in Internet history. About two months after the deal closed, the market crashed. But the cash deal was locked in at at fixed price. Great for Verio shareholders, not so great for NTT.

You can read the details on Wikipedia’s Verio page.

Whenever you see the word “reportedly,” be suspicious. That is all.

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5 Replies to “* Dell Acquires EqualLogic, But NTT’s Acquisition Of Verio Still The Largest Cash Deal In Internet History”

  1. Greetings Dan,

    OK, I see you point. But calling EqualLogic “the largest cash acquisition of a venture backed startup” is not correct. That statement (which prompted my initial blog post) is only correct when footnoted with all of the Globe’s caveats. Both EqualLogic and Verio were venture backed startups that were acquired for cash, and Verio’s cash acquisition price was four times EqualLogic’s (in seven-years-ago dollars).

    Regards,
    Erik

  2. Erik,

    I think Verio does not meet the criteria the Globe stated: It was already public when bought (i.e., no longer a start-up living on VC $), and had the mezz. financing from non-VCs. It looks like EqualLogic only had VC, and never made it public (by a hair’s breadth). It had nothing to do with “Internet” deals. While the Globe is not known for being error-free, Verio does not make Rob’s statement wrong in this case.

    I’m glad you like my blog. Hearing from people who read it helps encourage me to keep it up.

  3. Greetings Dan,

    Thanks for commenting. I enjoy reading your blog.

    I’m not surprised that The Boston Globe got the facts wrong. By the way, Verio was founded in March 1996 and received funding of $20 million from Norwest Venture Partners. Other funding methods were used along the way (including an IPO), but it was initially venture funded.

    Regards,
    Erik

  4. Eric,

    The report I read in the Boston Globe qualified it very carefully with “start-up fueled by venture capital”. Now I see why. According to the Wikipedia article you point to, Verio was “…funded by the principal founders, private investors, NTT, and institutional investors in a private placement.” It sounds like Verio was more than a plain old startup that was principally VC funded. Verio was a roll-up (adding existing businesses together), had private individuals as well as corporate funding (such as NTT), did a non-VC type of round (the private placement), etc. So I guess that’s the difference they were aluding to. It was clear from the wording that there have been other cash deals that were larger, but somehow this one had some qualifiers that could make it “the largest” of something. I put in the “reportedly” because I have no idea if this is true, but the Globe made a big deal of it (no pun intended) as something newsworthy and I thought that leaving it out could therefore be a mistake.

    In any case, I hope you listened to the podcast and found it interesting.

    -DanB

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