Channel programs News
Partners Anxiously Anticipating Decision On Dell VMware Reverse Merger
Michael Dell and his team are looking hard at the details of taking debt-straddled Dell Technologies public through a reverse merger with VMware, a move that solution providers predict will create a software-defined infrastructure super-power accelerating channel sales growth.
While a decision on a reverse merger probably won't come until April, according to a CNBC report published Thursday, some partners are giddy in contemplating the potential of that deal.
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, a Dell EMC Titanium partner, said he sees a Dell VMware reverse merger as a channel windfall.
"Based on the new tax law and all the changes going on in the market, the reverse merger with VMware makes the most sense for [Dell Technologies CEO] Michael [Dell], Dell Technologies and the partner community," said Venero.
Sources told the business news network that a reverse merger is favored by Dell and his team above an IPO because that route can simplify the company's capital structure. A merger of the two companies into a new public entity would likely involve an equity exchange giving Dell access to VMware's cash flow, CNBC reported.
VMware CEO Pat Gelsinger kicked off VMware's earnings call Thursday by telling investors that he won't comment on the recent Dell SEC filing that has generated so much media interest.
"If I have learned anything in 21 years of business it is if you don't change and adjust with the times you die," Venero said. "What Michael and his team have proven time and time again is they know how to embrace and take advantage of change. If and when this comes together, partners like us working with Dell and VMware won't have six shooter guns, we'll have Gatling guns with unlimited ammunition to go win business."
Dell and his team deserve kudos for exhibiting the thought leadership to adjust to the market, Venero said.
"At the end of the day, there are a lot of benefits for Dell and VMware partners dealing with a single organization with common programs, sales motion and leadership teams," he told CRN.
Douglas Grosfield, CEO of Five Nines IT, a fast-growing Kitchener, Ontario, strategic service provider, said he sees a combined Dell VMware shaking up the market with a more-robust combined partner program.
"I see this as Dell VMware putting more skin in the channel game," Grosfield told CRN. "Anytime you have a combination like this there is more opportunity for the channel to have a stronger voice. MSPs and Strategic Service Providers like Five Nines are going to benefit from this."
Grosfield said he expects a combined Dell VMware to offer a more-innovative channel program, with the right tools and resources to support partners.
"In the last couple of years, vendors have gotten complacent with their channel programs," he said. "This is going to shake things up and get everyone thinking about how to accelerate sales growth."
Grosfield applauded Michael Dell for continuing to push the technology and channel sales envelope.
"I always say the harder you work the luckier you get," he said. "Michael has an amazing work ethic. He always rolls up his sleeves and knows what he has to do to make the right investments to build and scale the business. He has gone public. He has gone private. He is not afraid to make big decisions and radical changes."
Round Rock, Texas-based Dell Technologies, which already owns 80 percent of the virtualization leader, is managing some $50 billion in debt that has become a top priority after the federal Tax Cuts and Jobs Act bill was passed by Congress.
The reverse merger could have benefits to tackling that debt because the new tax law limits tax deductibility of interest payments to 30 percent of a company's earnings.
Steve Burke contributed to this story.