The tech industry is full of risk. Back in 2011, Hewlett-Packard took a big gamble when it bought British software company, Autonomy, for $10 billion or “11 times greater than its annual revenue of $870 million,” the New York Times reports. Unfortunately, the risk was not worth the return. Autonomy underperformed, and HP ending up writing off most of the purchase price. And, thanks to pending litigation related to the transaction, the mistake just cost HP another $100 million.
Unhappy HP shareholders brought an impairment class action against the tech giant, arguing that the Autonomy deal hurt the value of their HP stocks. To resolve the lawsuit, HP has agreed to a $100 million settlement for shareholders who bought shares between August 19, 2011, and November 20, 2012, Silicon Valley Business Journal reports.
Although the lawsuit offers a second blow to an already failed business venture, HP announced that its insurance carrier would be paying the $100 million shareholder settlement.
This serves as a good reminder for all businesses, particularly those in volatile fields, that a good litigation insurance policy is essential.