HP And Autonomy — Buyer’s Remorse, Or Worse?

If anybody outside HP thought the $10 billion purchase price of Autonomy made sense, they were keeping pretty quiet about it. (Larry Ellison told analysts he had turned down the company because the price was too high.) Or if they thought this was going to be a good match of cultures — then again, HP has been so volatile in its corporate structures and organization that it’s hard to image what company would have been a good fit. Mike Lynch, the Autonomy CEO, was gone from HP within months.

Richard Holway, an English economic nationalist — in the good sense of wanting to see great tech companies flourish in England rather than selling out to Americans — cast doubt on the sale at the time writing in the excellent techmarketview newsletter. (Holway was pleased that Joanna Shields left Facebook EMEA to work for Tech City Investment Corp.)

In a posting this afternoon, he quoted the HP charges, noting that the newsletter had questioned the transaction at the time it occurred. (An IBM acquisitions exec talking about his company’s experience in buying complementary technological firms simply chuckled when I ask about Autonomy, but he wasn’t going to be drawn into commenting.)

Holway also cited Mike Lynch’s response to HP:

“The former management team of Autonomy was shocked to see this statement today and flatly rejects these allegations, which are false.

“HP’s due diligence review was intensive, overseen on behalf of HP by KPMG, Barclays Perella Weinberg. HP’s senior management has also been closely involved with running Autonomy for the past year. It took 10 years to build Autonomy’s industry-leading technology and it is sad to see how it has been mismanaged since its acquisition by HP.”

Holway notes that accounting issues, especially around capitalizing R&D costs, are pretty common in the software industry.

But if every tech M&A that didn’t work out as expected for the purchaser was referred to the SFO (Serious Fraud Office)  they would be having a very busy time!”

Lynch was planning to launch a $1 billion fund, Invoke Capital, to support UK startups.

Holway appears to be as well informed as anyone on UK technology…I am going to follow techmarketview closely because I suspect they will have the inside track on the controversy from the UK point of view.