21 November, 2012 - 12:33 By Tony Quested

HP should bottle this brand of sauce

If HP bosses had paid a team of consultants to come up with a paradigm for wrecking a business they could not have bettered the template used in the disembowelment of Autonomy.

 

The HP sabotage charter goes like this:

• Find an acquisition target whose line of business is diametrically opposite your core competencies• Pay a 64 per cent premium for the acquisition and the privilege of conducting your experiment• Hack off the mastermind of the acquired business by taking away his control and not even offering a place on the board• Sicken the management team by failing to use their talent while simultaneously strangling them with red tape• Fail to properly integrate the acquired business into the mothership• Give your sales team a bonus for selling competing products but not for selling the product of the acquired company• Arbitrarily impose a 30 per cent mark up on the acquired company’s product to persuade existing customers to take their business elsewhere• Store up all the company’s subsequent bad news and dump it in a steaming pile on the doorstep of the acquired company’s former management• As a matter of policy throw as much mud as possible at external players in the hope that at least some might stick.• Never – ever – admit responsibility for anything that goes wrong even though it was clearly your decision.

If HP bottles that particular brand of sauce it could sell it to other major corporates. Astute observers in the Cambridge technology cluster said when HP paid over $11 billion for Autonomy last October that it was a flawed move and a bad fit. Autonomy was no Cinderella and HP, clearly, no Prince Charming.Autonomy was fast and agile, HP a lumbering behemoth. It was akin to putting a tank driver in a Formula 1 car – then taking out the engine and loosening the nuts that held the wheels in place.All the accusations HP is hurling around about being misled on key financial data are finding little sympathy within the professional community.One respected technology sector accountant, who holds no truck with book-cooking, told me that accounting within the software sector was often like trying to clean up the town in the old Wild West.Fifteen professional services firms were involved in the HP-Autonomy deal on both sides of the Pond, each earning millions of dollars in fees.If what HP is saying about being misled – despite the collective expertise of these worthies – holds any credence then perhaps their advisers should next be sat in a room with a pile of old rope before being handed their next wad of money.Autonomy’s accounting procedures were the subject of lively debate between City analysts and Mike Lynch for some years and should have taken no-one by surprise – especially with $11bn riding on the deal. The buck stops here with HP’s bosses – more to the point 11 billion bucks stop with these bosses. HP has form in bad dealmaking and it’s time the board faced up to the facts.@Tonyquested

 

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