M&A WAR STORIES - The Good, The Bad and The Ugly
HEWLETT PACKARD'S 2011 DISASTROUS ACQUISITION OF AUTONOMY
June 16, 2021
Robert Heaton & Toby Tester
Last week we asked the question Could it get any worse?
Well, Toby has excelled as usual and the acquisition of Autonomy must go down in history as one of the worst, most value-destroying deals in the history of the Tech Industry and Corporate America.
This story is a bit like “Air Crash Investigations”. It’s not just one factor that conspired in a complete M&A disaster, but a number. Let’s list them:
- A CEO desperate to make a deal and rushed the process
- Two diametrically opposing cultures:
- A large unwieldy and bureaucratic buyer
- An aggressive “in-your-face” software firm big on personality, entrepreneurship and suspect sales practices
- A board with several new people with limited time to focus on the deal.
- A CFO who said “don’t do the deal”; roundly ignored.
- A Due Diligence process with limited financial transparency and an over reliance on ‘audited’ accounts.
- A lack of integration planning that would handle different cultures and make the deal work.
- A very optimistic valuation indeed; way above market expectations.
- AND a $8Bn write-down within one year of the deal closing
So apologies for our listeners, this one is over 30 minutes duration, but it's necessary to cover all of the salient points of this tech industry disaster.