The Question Michael Dell Refuses To Answer...

Michael Dell is strolling around the conference center in Davos today--looking quite sharp, as usual.

So are Steve Schwarzman and a number of other private-equity moguls, including some who may or may not be involved in the hot-and-heavy talks to take Dell private.

Michael Dell and the private-equity moguls, of course, won't discuss the ongoing talks, even in the corridors at Davos.

But here are some questions that Michael Dell, especially, should be encouraged to answer:

• What are you going to do when you take Dell private that you aren't doing now?
• Why don't you just do that now--for your public shareholders?

We can, of course, speculate about what Michael Dell and his private-equity partners will do when they take Dell private:

• Borrow a huge amount of money (lever the company up)
• Use that money and the cash on hand to pay themselves a huge one-time dividend (probably recouping their entire purchase price and then some in the process)
• Fire thousands of employees and drastically cut costs
• Sell off some crappy or un-strategic businesses
• Sell the company back to the public-market shareholders at a much higher price than they are about to buy it from them for
• Smile all the way to the bank

That's standard private-equity operating procedure.

Sometimes, if it's done well, it actually improves companies, in addition to making the private-equity moguls rich.

Sometimes, if it's done badly, it guts companies and overloads them with debt, so that they collapse within a year or two of being sold back to the public markets.

There's nothing wrong with the good part of that.

But if that's what Michael Dell and his private-equity backers plan to do with Dell when they buy it--if that's the way to generate an awesome return for shareholders--why doesn't CEO Michael Dell just do that now? What's stopping him?

SEE ALSO: The Truth About Davos