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Autonomy to remain UK-based after HP takeover

Management and R&D will remain in Cambridge as search leader's staff get shares windfall

Autonomy will maintain its UK roots following its shock £6.7 billion acquisition by HP.

The takeover, which is a triumph for Mike Lynch who launched Autonomy from his Cambridge bedroom with a £2,000 loan in 1996, has produced rumblings of concern about the future of the UK software industry. Veteran analyst Richard Holway commented, "RIP the best of British software," for example.

But Autonomy will remain headquartered in Cambridge, and all key R&D will remain in the city. Autonomy's UK employees will share a £30 million share options bonanza.

CEO Mike Lynch will report directly to Leo Apotheker, CEO of HP and Autonomy's current management team will remain at the helm, according to the company.

Mergers and acquisitions of this kind always result in disruption and personnel change, and there have been question marks over Autonomy's management structure.

Last October, Marc Geall, a Deutsche Bank analyst and former head of investor relations at Autonomy produced a 26 page report which noted:

"The management structure, control and systems at Autonomy are more representative of a start-up than a major global player. The senior management team is talented but lacks bandwidth. This can lead to some decision paralysis as middle management is sometimes limited in its autonomy."

"Autonomy still manages a very flat structure with a tight chain of command into the CEO and CFO," he went on. "Although they have managed this structure effectively to date, we believe the business is becoming too big and time is now becoming the limiting factor. There are after all only 24 hours in the day and 90 days per quarter."

Geall also criticised Autonomy's sales teams, claiming they were "hunters, not farmers" and not suited to nurturing customers, as the focus inevitably shifts from winning new deals to recurring business.

The deal with HP potentially answers some of this criticism. Autonomy will have access to HP's general management expertise and. More importantly access to HP's 28,000 strong sales force. However, Holway also commented, "When US companies take over UK software houses. There are no happy endings."

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