HP and Autonomy: the fallout continues

After the surprise resignation of Mike Lynch yesterday, more skeletons are rattling out of the closet. It seems that HP and Autonomy really aren't getting along...

by Andrew Saunders
Last Updated: 21 Nov 2012

Not only is Lynch departing, but is has emerged that a good number of his top team have also either left or are about to. These include CFO Steve Chamberlain and COO Andy Kanter, plus CTO Pete Menell and others. All citing exasperation with the dead hand of HP’s management bureaucracy.  

Of course when a big, complicated business buys a small and dynamic one these kind of tensions go with the territory. The challenge is managing them effectively, something which is notoriously hard to do. We all know the old saw that 75% of takeovers fail to generate value, and a fair number of those failures are down to exactly the sort of culture clash that is emerging here. 

Perhaps the problem from the HP perspective is that the management, under pressure to show progress in turning around the ailing giant, rushed the process of trying to integrate Autonomy’s entrepreneurial culture and leadership into HP’s corporate and notoriously bureaucratic one. Such integrations need very careful handling and the onus in on the acquirer to make it work. The mass exodus of top talent form Autonomy demonstrates that this has not happened as it should.  

The ostensible reason for Lynch’s departure was the poor revenues produced by Autonomy since the takeover: this could simply be a consequence of distracted, under-motivated managers struggling to cope with their new master's way of dong things.  

But it’s also legitimate to ask just how far Lynch looked beyond the $10.3bn price he managed to extract from HP. Money isn’t - or shouldn’t be - the only thing on the table during M&A negotiations. Surely the clashes that have developed so quickly could have been foreseen?  

Lynch has always had a reputation as a evangelical salesman, and it looks like those who said at the time that HP had overpaid have been proved right. But the challenge for HP is that, having paid that price, it now has to try and get the most value out of the asset. It doesn’t seem to be doing a great job on that front so far. 

The news that not only its boss but half the Autonomy top team are now on the loose makes the question of what’s next even more intriguing. Could they regroup and form a revenge business? It would certainly be fun to watch.

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