HP/Autonomy – valuable reminders

The fallout from the HP/Autonomy transaction shows how much importance is put on financial information when undertaking an acquisition.  Although time will tell whether HP are correct in their assertions regarding accounting irregularities, it is a valuable reminder that irrespective of the size of your business, as a director you need to be confident that the accounting policies and the practical application of those are compliant with the legal requirements of your own jurisdiction.  This needs to be mindful of the best practice established within your industry taking into account your own terms of business and business practices.

As a business owner, if you are planning to sell your business then you are likely to be required to give representations and warranties in the sale and purchase agreement confirming your accounts are compliant with the legal requirements and accounting standards.  If that proves incorrect, at best you will be left with potential financial claims against you by the purchaser and at worst this might lead to criminal sanctions.