Case Study of a Failed M&A—The Role of Communication in HP’s Acquisition of Autonomy

HP had little experience managing software and found the software business unfamiliar. HP ultimately made the decision to let Autonomy function as an independent unit. Consequently, effective communication between the two companies was not developed.

Information Availability

One indicator that HP’s acquisition of Autonomy would not yield the anticipated results is communication, or lack thereof, between the two companies. A key takeaway from Why Deals Fail: And How to Rescue Them is that “A high-quality communication plan is crucial to the success of a deal….”1 Elements of a high-quality communication plan include openness and principles vs. application based learning.

Openness. Correct implementation in the beginning of a merger, including open communication and integration of the two companies, is critical to the success of the combined entity. In this case, HP had trouble fusing Autonomy into its other operations from the start. Initially, HP left Autonomy to operate as its own unit.  One source noted that, “According to [Mike] Lynch, Autonomy has been kept quite autonomous in HP…,”2 while another noted, “Mike Lynch, who founded Autonomy in 1996, will continue to be chief executive of Autonomy, which will be run as a separate business unit. He reports to Ms. [Meg] Whitman.”3 Given this information, it seems that the integration of Autonomy was not a high priority. HP wanted to create more value with Autonomy by expanding its business into the software market, yet in failing to properly integrate Autonomy, HP forfeited many of the potential synergistic gains. In another instance, a source noted, “Autonomy employees were physically barred from entering HP facilities, and Autonomy was forced to go through the tedious process of becoming certified as a ‘partner’ before it could work with other HP divisions, exactly as it would if it was a third-party company.”4 In spite of the lack of integration, many former Autonomy employees complained that HP’s bureaucratic culture “made it difficult to get things done” and that the “endless series of conference calls and form-filling felt ‘like being water-boarded.'”5

The fault doesn’t rest solely on HP, however. The CEO and founder of Autonomy, Mike Lynch, seemed difficult to work with as well:

An HP executive [stated] Lynch was not interested in moving forward once the deal was completed. “He was at every strategy session, was in person or on video for every meeting of the executive council…He wouldn’t work with anyone. Sometimes he was enthusiastic, but other times he’d say, ‘This makes no sense. I’m going back to London.’”6

It is even said that, “at a going-away party, an H.P. lawyer presented Mr. Lynch with a sweatshirt with the word ‘integration’ and a line through it.”7 By limiting communication between themselves, HP and Autonomy inhibited their chances of achieving successful integration.

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  1. Driessen, M., Faelten, A., & Moeller, S. (2016). Why Deals Fail: And How to Rescue Them. The Economist.
  2. Saran, C. (2011, November). Interview: Mike Lynch on Autonomy at HP. Retrieved from http://www.computerweekly.com/news/2240111723/Interview-Mike-Lynch-on-being-autonomous-at-HP
  3. Dealbook. (2011, October 3). HP Completes Acquisition of Autonomy. Retrieved from http://dealbook.nytimes.com/2011/10/03/h-p-completes-acquisition-of-autonomy/?_r=0
  4. McAllister, N. (2015, October 2). Autonomy ex-boss Lynch tells of poisonous life within HP in High Court showdown.
  5. Palmer, M. (2009, August 18). Tech Prophet Preaches to US. The Financial Times
  6. Stanwick, S. D., & Stanwick, P. A. (2014). HP and Autonomy: An Unethical Marriage Made in Hell. International Journal of Business and Social Science.
  7. Hardy, Q., & De La Merced, M. J. (2012, November 20). Hewlett’s Loss: A Folly Unfolds, by the Numbers. The New York Times.