It appears some top Quest Software Inc. executives, including Chief Executive Vincent “Vinny” Smith and Vice Chairman Doug Garn, may not be part of Dell Inc.’s integration plans.
Dell announced a $2.4 billion acquisition of the Aliso Viejo-based business-software maker in early July, and well-placed sources said Smith and Garn might leave rather than sign non-compete agreements of up to five years. Another sticking point involves the executives’ unvested stock options, which could be eliminated, accelerated or maintained after an acquisition.
Shayne Higdon, Quest’s senior vice president and general manager of client management and performance monitoring, also appears leaning toward an exit.
Quest executives held talks with top Dell representatives last week to discuss the issues. Dell software boss John Swainson also was expected to meet with Smith and Quest employees to outline Dell’s vision of diversifying product lines beyond computers.
A Dell official declined to discuss any of the matters related to integration until the Quest transaction closes. Dell expects to finalize the deal by October.
Negotiations between top executives of each company hit a critical point last June. That’s when Smith told Swainson and mergers and acquisitions head Dave Johnson he wouldn’t accept an offer for the company of less than $28 per share.
Dell hit the number and a deal was sealed a few weeks later.
Quest makes software that manages and improves on other business products from Redmond, Wash.-based Microsoft Corp., Oracle Corp. in Redwood Shores, New York-based IBM Corp. and others.
Dell has been highly acquisitive of late, and if recent history is any indication, top brass could be out of the picture.
“The CEOs have left typically,” said Jason Noland, senior analyst in the San Francisco office of Milwaukee-based Robert W. Baird & Co. “Dell has a track record now.”
Top executives at companies smaller than Quest would be likely kept aboard after an acquisition, as they often developed the company’s technology and carry daily operational responsibilities, Noland said.
“A more mature company, I don’t think it’s that big of a deal,” he said.
Smith’s interest in Quest grew through an investment his Insight Capital Partners made in 1995. He took a seat on Quest’s board and gradually became more involved, becoming chief executive in 1997 and chairman.
Quest has almost 3,900 workers, 600 of them in Orange County. The company was Orange County’s third-biggest software maker with $857 million in 2011.
The Quest buy is Dell’s second largest to date. The Texas-based company acquired Texas-based IT provider Perot Systems for $3.9 billion in 2009.
