The financial firms behind the Autonomy deal

HP’s Autonomy Debacle: Whose Fault Is It Anyway?
Excerpt:

That’s $68.8 million in advisory fees to these eight firms – of which HP contributed $30.1 million. At the end of it, the deal was finalized at the inflated value of $11.2 billion for Autonomy, with an almost unanimous approval from the shareholders and boards on both sides.

As the Feds and the SEC dig into Autonomy’s reported numbers to verify whether it indeed was cooking its books, the big question that demands an answer is how did so many smart people missed this when it really mattered. There are a lot of ‘maybes’ involved in this entire drama: Maybe Autonomy did misrepresent its numbers intentionally. Maybe HP realized that there was an accounting issue AND that the technology business itself was not worth its initial estimate and so it decided to go in for a “big bath” write-off. Maybe Deloitte thought that the way Autonomy was reporting numbers was just a small aberration that everyone would overlook. And maybe the investment banks who advised really believed that the deal was being valued accurately.

The result – on a deal worth $11.2 billion, HP takes a $8.8 billion write-off. So what, Autonomy was/is worth $2.4 billion? That hardly looks right, especially taking into account the fact that HP paid a 58% premium to Autonomy’s share price at the time of the acquisition.

It makes you wonder what the auditor and investment banks were being paid for, doesn’t it?

Comment: Not unlike Arthur Andersen's auditing Enron!