Who Owns Gartner?

Fleisher insists he doesn't even know who invests in Silver Lake: "I've never seen a list or even asked."

Still, could Silver Lake's close ties to tech execs hurt Gartner's reputation just by association? Silver Lake touts those relationships as a competitive advantage and says it will tap them to help portfolio companies. But Silver Lake managing director Mike Bingle downplays potential conflicts of interest. "They have absolutely no influence or governance over what decisions we make," he says. "Their investments are entirely financial, made at arm's length."

Customers are very sensitive these days "to activities that compromise the objectivity of research firms," says Tony Friscia, CEO of Gartner competitor AMR Research. But Gartner's Silver Lake ties aren't cause for concern, he says. Friscia refers to Dell, Ellison, and Gates as passive investors in Silver Lake, adding, "It's not like Larry Ellison took a 20% ownership position in Gartner."

Silver Lake's involvement might never touch Gartner's research, but it's likely to have an impact on Gartner's business. The firm has a reputation for being an active investor. It was part owner of Datek Online Holding Corp. prior to Datek's $1.3 billion merger with Ameritrade Holding Corp. Before that, it helped architect a deal that involved the transfer of Seagate Technology's operating assets to a third company--formed by Silver Lake and other private equity investors--followed by the merger of Seagate and a subsidiary of Veritas Software.

Given its deal-making background, Silver Lake's leadership is unlikely to wait quietly if Gartner's business doesn't improve. Gartner last week reported an 11% decline in revenue, to $197 million, for the September quarter, which included a 6% drop in its flagship research business and 21% fall in consulting fees compared with a year ago. Profit sank to $5.5 million from $15.6 million last year. "This segment overall is in really rough shape and needs to reinvent itself," says Chuck Richard, an analyst with Outsell, a research firm that tracks Gartner and other information-services providers.

In a 10Q statement Gartner filed with the Securities and Exchange Commission in August, before the debt conversion, Gartner warned that Silver Lake could "exercise significant control over the company" if it gained such a large block of stock. CEO Fleisher says Silver Lake's principals "are very engaged" but notes they only hold a 38% stake in Gartner. "They are by no means a control shareholder," he says. The upside: With its debt erased, Gartner now has a healthier balance sheet.

Silver Lake officials say nothing "radical" is in their playbook for Gartner. Echoing Fleisher's prediction of a pending rebound in IT spending, Silver Lake partner Bingle says Gartner stands to benefit from an improving market outlook. "Just by executing well, the company should be able to create a lot of value," he says.

With Gartner shares around $13, Silver Lake's stake is worth approximately $630 million on paper--more than double its investment. While that doesn't come close to the 10-times return Silver Lake sometimes generates, the firm has had money in Gartner for more than three years, and sooner or later it has to show investors the fruits of that deal. Barring a sale of Gartner to another company, which could happen only with the approval of Gartner's other shareholders, it's unlikely Silver Lake would attempt to unload 49 million shares in a single transaction. When the time comes, Bingle says, Silver Lake would prefer to coordinate its exit strategy with Gartner's board.

The transfer of Gartner stock by Silver Lake to its investors is another possibility, albeit a remote one. Meanwhile, Gartner's leadership might consider giving customers a little more analysis on its own business.