HP may have overpaid for Autonomy, one of Britain’s most successful-ever tech companies, but then beauty – like value – is in the eye of the beholder. Autonomy’s shareholders certainly took a hostile attitude to the acquisition almost from the word go.
But instead of looking to themselves, HP have opted to lash out in the most dramatic possible way, leveling serious fraud charges against a company on whom it conducted extensive due diligence little over a year ago.
HP CEO Meg Whitman may find it hard to explain how the “host of very concerning accounting improprieties” she is now claiming did not emerge in HP’s initial due diligence process. The defence, that “when you’re lied to, it’s hard to find”, is unlikely to placate shareholders who will conclude that, as one of the board members who signed off on the deal, she cannot so easily escape the blame.
Many of us are rather amused watching this from the sidelines.
HP sought to reposition itself towards software under a former CEO, Leo Apotheker. It sought to become a major player in smartphones with the acquisition of Palm. It sought to become a major player in services with the purchase of EDS. To say that its customers might be confused after three botched acquisitions and three CEOs in rapid succession is an understatement.
If Autonomy has been guilty of wrongdoing, then the necessary sanctions must follow.
As things stand, with a stock value that has sunk to a ten-year low, HP bosses need to look to themselves to get the company back on track. Putting the spotlight on Autonomy may distract the media attention short term, but nothing can conceal the long-term trends, which are lining up against the company.
What concerns me, though, as a venture capitalist in the UK is why do we continually have to sell our best businesses to US tech firms? Autonomy was listed. It didn’t need to sell to give its shareholders a liquidity event. Compare this to Monitise, the leading mobile banking firm, which acquired its biggest competitor, Clairmail, this year. Building and keeping headquarter firms in the UK who act as anchors for other start-ups is critical to building the start-up ecosystem we all want. Autonomy had an opportunity to be that anchor, and in doing so, create the garage start-ups of the future.
I didn’t get into venture capital to sell to the Americans. As an entrepreneur, I also know that you never win by playing by someone else’s rules. You have to create the rules of the game in order to win. So my recipe is to hold – build dynasties – play a long-term game – outlast your acquirors, and become the consolidator. Monitise shows that it can be done.
Julie Meyer is managing partner at ACE Fund.
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