SiliconBeat

UPDATE: I just got a call from someone close to Elevation Partners who walked me through the numbers. Bottom line: Elevation expects to receive $485 million from the HP deal for the $460 million it invested.

Why? The original $325 million that Elevation invested was guaranteed in the event of an exit. In other words, out of the $1.2 billion that HP is paying, Elevation get made whole for that $325 million. Through in the other warrants and other convertible stock, and Elevations winds up with $485 million.

Worth noting: That also means that common shareholders will be getting much less than the $5.70 per share being touted in press releases.

The common shareholders still get $5.70 per share, a figure calculated after Elevation’s payout is backed out.

See this post from the Wall Street Journal and this one from Barron’s for more details on how the preferred shares are structured.

MY ORIGINAL POST:

At first glance, it’s hard to say for sure whether Elevation Partners will take a hit or just about break even on its Palm investment. On Wednesday, Hewlett-Packard said it was buying Palm for $1.2 billion, or $5.70 per share.

Elevation is Silicon Valley’s big buy-out firm whose investors include Bono of U2 fame and noted venture capitalist Roger McNamee. For a good overview of Elevation, check out this TechCrunch post from a few weeks ago. Palm was one of its biggest bets.

Here’s my math on the deal: Read the rest of this entry »

Just a little over a week ago, I wrote about “The three valley companies most vulnerable in 2009.” My three top picks were Sun Microsystems, AMD and Palm.

I haven’t changed by mind on Palm’s outlook. But on Monday, the company announced that it raised $100 million from Elevation Partners, one of its main backers.

According to the press release:

“The additional capital from Elevation Partners will enable us to put added momentum behind the new product introductions scheduled for 2009 and will provide us with enhanced stability in unsettled economic times,” said Ed Colligan, president and chief executive officer of Palm, Inc. “Elevation has been a great partner to Palm, and we appreciate their continued confidence and support.” Read the rest of this entry »

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