WSJ Law Blog: Are the lawyers to blame for the HP-Autonomy mess?
As soon as the dust began to settle after yesterdays news that Hewlett-Packard Co. (HP) was going to take an $8.8 billion hit thanks to misrepresentations by a software company it purchased last year, the finger-pointing began.
November 21, 2012 at 06:02 AM
18 minute read
The original version of this story was published on Law.com
As soon as the dust began to settle after yesterday's news that Hewlett-Packard Co. (HP) was going to take an $8.8 billion hit thanks to misrepresentations by a software company it purchased last year, the finger-pointing began.
Of course, HP wasn't shy about immediately blaming U.K.-based Autonomy for fraud. “HP is extremely disappointed to find that some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP,” the company said in a statement yesterday. “These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management's ability to fairly value Autonomy at the time of the deal.”
But Autonomy's former CEO Mike Lynch fired back right away—through a spokeswoman—claiming HP's accusations against the company he led at the time of the acquisition were baseless.
“The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false,” the spokeswoman said yesterday. “HP's due diligence review was intensive, overseen on behalf of HP by KPMG, Barclays and Perella Weinberg. HP's senior management has also been closely involved with running Autonomy for the past year.”
So what about the lawyers? Shouldn't they have been able to uncover any misrepresentations on Autonomy's part during the deal discussions? That's what the Wall Street Journal Law Blog asked today.
There were four firms representing HP's interests in the deal. Gibson, Dunn & Crutcher; Freshfields Bruckhaus Deringer; and Drinker Biddle & Reath represented the company while Skadden, Arps, Slate, Meagher & Flom represented HP's board. While none of the four firms responded to requests for interviews from WSJ, the Journal did reach out to a veteran M&A lawyer in New York, who said while a lawyer has many important responsibilities in managing these types of deals, digging into the numbers isn't one of them. “You're not paid to do forensic accounting,” he said.
Read the full WSJ Law Blog post, “Should the Lawyers Shoulder Any Blame for H-P's Latest Headache?”
As soon as the dust began to settle after yesterday's news that
Of course, HP wasn't shy about immediately blaming U.K.-based Autonomy for fraud. “HP is extremely disappointed to find that some former members of Autonomy's management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy's acquisition by HP,” the company said in a statement yesterday. “These efforts appear to have been a willful effort to mislead investors and potential buyers, and severely impacted HP management's ability to fairly value Autonomy at the time of the deal.”
But Autonomy's former CEO Mike Lynch fired back right away—through a spokeswoman—claiming HP's accusations against the company he led at the time of the acquisition were baseless.
“The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false,” the spokeswoman said yesterday. “HP's due diligence review was intensive, overseen on behalf of HP by
So what about the lawyers? Shouldn't they have been able to uncover any misrepresentations on Autonomy's part during the deal discussions? That's what the Wall Street Journal Law Blog asked today.
There were four firms representing HP's interests in the deal.
Read the full WSJ Law Blog post, “Should the Lawyers Shoulder Any Blame for H-P's Latest Headache?”
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