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Another case of Caveat Emptor

Jeremy Warner, Telegraph 22 Nov 2012:

Last year, Hewlett-Packard, the world’s largest PC manufacturer, coughed up a humongous $11.1 billion to buy the British software company Autonomy.

Even at the time, HP was widely thought to have wildly overpaid, but by how much only became apparent this week, when the firm wrote off more than three quarters of the purchase price.

In the process, HP claimed that it had been deliberately sold a pup – the books had been wilfully cooked, it alleged, to make profits seem higher than they really were.

On one level, this is just another case of caveat emptor. But it was not as simple as this.

One of the most shocking aspects of Autonomy’s alleged heist was the extraordinary array of top-drawer investment bankers, accountants, lawyers and general hangers-on who managed to extract a fee from it.

In total, these advisory fees amounted to close on $100 million – this for the Autonomy buy-out which, whether fraudulent or not, had within months reduced the purchaser to rubble.

For the record, Mike Lynch, the former chief executive, denies any wrongdoing.

Full text

BTW Caveat Emptor was the name of the book that I was once thinking of writing.

Caveat Emptor

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