Dell Inc. (NASDAQ:DELL)  investors should back founder Michael Dell’s $24.4 billion buyout plan, Institutional Shareholder Services Inc. said, in a surprise endorsement of the deal from the biggest shareholder-advisory firm.

Approving Dell’s move to take the company private would shelter shareholders from risks associated with the deteriorating personal-computer business, ISS said today. As recently as last week, ISS was leaning against recommending Dell’s offer, people familiar with the matter said at the time.

Backing from ISS gives ammunition to Michael Dell, who wasn’t planning to sweeten his offer, as he seeks investor support ahead of a shareholder vote on the deal. Dell is working to scuttle a challenge by billionaire investor Carl Icahn, who said last week that he obtained $5.2 billion in debt financing to support his third and latest effort to derail the CEO’s proposed buyout.

“The ISS vote is a positive for Dell and Silver Lake,” Jeffrey Fidacaro, an analyst at Monness Crespi Hardt & Co., told Bloomberg News. “They may not feel like they actually need to raise the deal if ISS is agreeing with them.”

Institutional investors look to ISS’s findings for guidance on how to vote their shares, often swaying the outcome. Dell’s special board committee overseeing the buyout negotiations appealed to shareholders for support in a July 5 filing, seeking to blunt the influence of an anticipated rejection by ISS.

Competing offers

Michael Dell and Silver Lake Partners have offered to buy Round Rock, Texas-based Dell Inc. for $13.65 per share, or a total of $24.4 billion. Michael Dell believes he can turn the company around by taking it private and diversifying into niches, such as business software, data storage and consulting.

Icahn, Dell’s second-largest shareholder, says he wants Dell to remain publicly traded and boost value for shareholders by buying back $16 billion in stock.

Michael Dell’s proposal requires approval by a majority of holders excluding Michael Dell. For Icahn’s plan to succeed, he must convince shareholders to reject Dell’s buyout. Then, Icahn needs shareholders to back his efforts to gain control of the board in a proxy context that will count Michael Dell’s vote.

The company has backed Michael Dell’s proposal and said that Icahn doesn’t have adequate financing for his plan. Shareholders will vote on the buyout offer at the company’s annual meeting on July 18. Icahn’s plan would be funded with $5.2 billion in debt, $7.5 billion in Dell cash and $2.9 billion from the sale of Dell receivables. Icahn has said he and his affiliates have $5 billion in existing equity and proposed debt financing to help fund their proposal.

In its report, Institutional Shareholder Services pointed to the offer’s hefty premium, about 26 percent over the company’s share price before the offer became public, and the certainty that comes with an all-cash bid.

“The alternative to accepting the buyout offer is to continue holding equity in a publicly traded Dell, with continued exposure to the risks and rewards of ownership,” ISS said in its report today.

PC slump

Dell’s woes have been compounded as the PC market has declined. PC shipments plummeted 14 percent in the first quarter, the steepest decline since market researcher IDC began tracking data in 1994. IDC, which projects that shipments will tumble 7.8 percent this year, is scheduled to release second- quarter PC market results July 10.

Dell, who founded the company in his University of Texas dorm room in 1984 and took it public four years later, rose to become the world’s top PC maker with a manufacturing system that turned out the machines faster and more cheaply than competitors. As the computing market has shifted toward mobile devices like tablets and smartphones, Dell has struggled to remake itself.

Sales in 2012 declined 8 percent to $56.9 billion and net income tumbled 32 percent to $2.37 billion. This year, Dell is expected to earn $1.44 billion, less than half seen in 2005, according to the average of analysts’ estimates compiled by Bloomberg.

CEO Dell told his board that going private would be the best course of action because it would let him boost spending on acquisitions, sales staff and research and development, while investing in PCs and tablets and expanding Dell’s reach in emerging countries, according to a March filing with the U.S. Securities and Exchange Commission.

The special committee of Dell’s board evaluating the company’s options said in a statement that it was pleased with the recommendation, noting that it believes not going forward with the sale would expose the company and its shareholders to “serious risks” that would further reduce the company’s value.

Icahn said Sunday that he believes Michael Dell is trying to buy the company he founded at a “bargain price.” He reiterated the benefits of his alternate proposal, which would involve the repurchase of up to 1.1 billion Dell shares at $14 apiece.

Dell stock was trading at $13.40 midday, up 2.84 percent from Friday’s close.

Bloomberg News and The Associated Press contributed to this report.