Hewlett-Packard
HP-Autonomy Acquisition Write-Down
Estimated impact: $8.8B write-down
HP acquired UK software firm Autonomy for $11.1B, then wrote down $8.8B just one year later, alleging Autonomy had inflated revenue through fraudulent accounting. HP's due diligence failed to detect alleged channel stuffing and hardware sales disguised as software licenses.
Decision context
Whether to proceed with the acquisition at a 64% premium despite concerns raised by Autonomy's own CFO (who was later fired) and short seller warnings about revenue quality.
Biases present in the decision
Toxic combinations
- Blind Sprint
- Optimism Trap
Reference class base rates
Across all 146 curated case studies in our library:
Lessons learned
- Confirmation bias in M&A due diligence means deal teams seek to validate the acquisition thesis rather than stress-test it
- Anchoring to a strategic narrative (pivot to software) can override financial red flags in target company metrics
- When a CFO of the target raises concerns and is fired, acquirers should treat this as a major red flag, not a resolved issue
Source: HP SEC filing (2012); U.S. DOJ fraud charges against Autonomy executives (2018) (SEC Filing)
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