In Times of Change, Insight Comes First

In 2010, HP lured former SAP CEO Léo Apotheker with a compensation package worth $59 million, banking on his enterprise software background to lead HP’s strategic shift. However, HP’s board failed to conduct sufficient due diligence into Apotheker’s controversial tenure at SAP—marked by declining stock performance, aggressive layoffs, and financial reporting concerns.

Within months of taking the helm, Apotheker proposed spinning off HP’s PC business (then accounting for nearly 30% of revenue) and led a $11.1 billion acquisition of UK-based Autonomy—despite its book value of just $2.6 billion. The deal raised red flags due to Apotheker’s undisclosed personal ties with Autonomy CEO Mike Lynch and a lack of board oversight.

In 2012, HP announced an $8.8 billion impairment due to Autonomy’s financial misstatements. Its stock plummeted by 70%, wiping out over $30 billion in market value. Apotheker was dismissed after just 11 months—marking the shortest CEO tenure in HP’s history. The chairman resigned, and five board members were ousted by shareholders.

• Executive due diligence must assess past performance, reputational risk, leadership style, and internal feedback.

• Potential conflicts of interest must be disclosed and independently reviewed in M&A deals.

• Due diligence should go beyond financials and legal to include assessments of leadership integrity and decision-making.

For any executive appointment or strategic acquisition, organizations should engage third-party due diligence experts to:

• Conduct comprehensive background checks (including litigation, regulatory history, media reputation)

• Identify conflicts of interest and undeclared affiliations

• Assess leadership style compatibility with corporate culture

• Verify findings using global data sources to minimize blind spots