“Ill-Fated Hewlett-Packard Deal Is Back in Court,” The Wall Street Journal, March 26, 2019. HP alleges that Autonomy fraudulently inflated its financial results, leading HP to pay an hugely inflated price for the company.
What controls are in place to prevent you from overpaying for a company? Isn’t that why there are such things as audited financial statements and due diligence by teams of lawyers and accountants? Didn’t HP and its board of directors consider the possibility that the numbers had been juiced?
So, principally Governance and Information. But a bit of Compliance, as the HP directors had a duty of care (which is a legal duty), as did the directors of Autonomy. Are they getting sued, too? Did the shareholders of both companies assume that the directors and officers would fulfill their duty of care?