But seven months later, Lynch was out of HP, fired by the US giant’s new boss Meg Whitman. It was an abrupt end to his tenure at the company he started in 1996, spun from an audio hardware business Lynch founded in the 1980s after being loaned £2,000 from a band manager in a pub.
Autonomy’s enterprise software, which processes, understands and archives information from sources such as voice recordings or videos, was a hit, and the company listed on Nasdaq in 2000, at the height of the dotcom boom, followed by a London float six months later. It suffered temporarily when the technology bubble burst in 2001, but recovered rapidly, and when HP came knocking, Autonomy had retaken its FTSE 100 position and was still growing.
However, by the time it was bought, the company had already seen some financial controversies.
US IT giant Oracle alleged that Lynch had tried to “shop” the business to president Mark Hurd a few months before the HP deal, a claim Lynch denies. Oracle said that Autonomy’s valuation, at $6bn, was “way too high”, even at just over half of what HP ended up paying.
In May, Lynch was shown the door after Autonomy’s initial months at HP disappointed. Other executives, including VP Finance Steve Chamberlain, also left the firm.
As for HP, the fallout from the deal has come at the worst possible time, as the company tries to turn itself around in the face of falling PC sales.
HP’S TWO CLASHING PERSONALITIES
CHIEF EXECUTIVE, HP
After stints at Procter & Gamble and Disney in her early career, Whitman joined the flourishing startup eBay as chief executive in 1998. She held the position for nine years, turning the firm into a global giant. After a failed campaign to be governor of California in 2010, Whitman returned to Silicon Valley, joining HP’s board in January 2011 and took over in September after ex-boss Leo Apothekar was sacked.
Lynch started Autonomy after running a series of technology companies in the 1980s and 1990s, following his PhD in mathematical computing at Cambridge. Though described as an exceptionally bright and motivated individual, Lynch had a tense relationship with the City, continually claiming it undervalued his business. Lynch pocketed £500m from Autonomy’s sale, and was forced out of HP in May this year.
ADVISERS | HP’S $11BN AUTONOMY ACQUISITION
A Silicon Valley legend, Quattrone advised Autonomy on its $11bn sale to HP. He took dozens of technology companies public in the 1990s, including Amazon, but disappeared from investment banking after he was accused of blocking a government investigation into price-fixing on flotations. He returned in 2008 to set up Qatalyst Partners, which advised Autonomy on its sale after apparently offering the firm around to a number of other US companies. Also advising Autonomy on the deal was an unusually large collection of big investment banks: Goldman Sachs, Citigroup, UBS, Bank of America Merrill Lynch and JP Morgan.
HP was advised on the acquisition by Barclays Capital in London, with the team headed up by Richard Taylor, who was made head of its European investment banking arm on Monday.
However, more scrutiny may fall on the deal’s auditors. Deloitte ran the numbers on Autonomy’s side in Cambridge, with the books signed off by senior manager Nigel Mercer. KPMG were hired by HP to participate in the due diligence process.
Neither HP nor KPMG commented on the alleged accounting irregularities yesterday, citing client confidentiality.