No one writes about finance issues better than Levine: Michael Dell bought his company too cheaply and there’s nothing wrong with that, Matt Levine writes in Bloomberg View. Levine chastises a court decision reached by Delaware Vice Chancellor Travis Laster to award Dell’s former shareholders and extra USD 3.87 per share plus interest. He says it’s driven by difference in valuation of discounted cash flow models that would be used by public investors and leveraged buyout models used by private equity firms. “So you see the problem. Private-equity firms will only buy companies for cheap and lever them up, so they can get the 20-plus percent returns that their investors demand. So any price that a private-equity firm will pay for a public company is inherently suspect, since private-equity firms expect such high returns. So Vice Chancellor Laster ignored the price that Silver Lake actually paid, after a quasi-auction among private-equity firms. He chose his own DCF model, with lower expected returns, and calculated a higher price for Dell. And then he declared that that was the fair value.”

Levine notes that the “fair price” calculated by Laster was one that no one was willing to buy because: “1. Public shareholders won’t pay fair value for Dell, because they are obsessed with the short term and can’t understand the long-term strategic vision. 2. No strategic buyer would pay fair value to buy Dell, because that would be risky. 3. No private-equity buyer would pay fair value to buy Dell, because private-equity firms only buy companies at a discount.” Everyone agreed that Dell was undervalued, Levine says, but Michael Dell and his private equity consortium were the only ones to put their money where their valuation was, and a court penalised them for that.