The downfall of Mike Lynch, “Britain’s Bill Gates”

Mike Lynch is an outstandingly clever and stimulating character who sold his “tech darling”, Autonomy,  for $11.7bn in 2011.  Since then he’s been mired in legal wranglings over that sale.


Mike Lynch is an outstandingly clever and stimulating character who sold his "tech darling", Autonomy, for $11.7bn in 2011. Since then he's been mired in legal wranglings over that sale. Jane Lewis reports.

When an FT reporter interviewed "the UK's answer to Bill Gates" in November 2010, he was struck by the sheer breadth of the Autonomy founder's conversational scope. Mike Lynch "is, it's clear, outstandingly clever" and "stimulating in debate", Peter Whitehead reported. "I was also struck by how many topics we had managed to cover in a relatively short time" ranging from "corporate growing pains", through Lynch's "untrainable dogs", to his enlightened strategy of hiring anyone he rated as "bright" whether they were technicians or not.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The deal that felt wrong

Then, at the height of his pomp as architect of the UK's most celebrated software house, Lynch cashed in his chips when he sold Autonomy to Hewlett-Packard for the eye-popping sum of $11.7bn in 2011, says The Daily Telegraph. The management of the ageing Silicon Valley firm savoured the idea transforming their "creaking hulk, dependent on sales of office printers and overpriced ink cartridges", into a punchy software innovator. But the deal felt wrong from the start.

Within a year, HP's new broom, Meg Whitman, wrote down the value of Autonomy by $8.8bn, claiming HP had been conned in a giant fraud perpetrated by Lynch and his team, who had used every devious ruse imaginable to artificially inflate Autonomy's figures prior to the sale.

Advertisement - Article continues below

Lynch & co countered that HP was trying to cover up its own botched absorption of the former British tech darling. Cue a six-year legal slug-out which reached a climax last week when Lynch, 53, was charged by the US Department of Justice on 14 counts of fraud and conspiracy, says The Sunday Times. If convicted, he will certainly face the full wrath of Uncle Sam.

Lynch's legal struggles are a sad finale to a stand-out career, says The Guardian. He was one of those rare people capable of marrying technical genius with hard profits "a top-class European academic who not only made the transition to tech entrepreneur but went on to create a global company". Born in Ireland, he was raised near Chelmsford in Essex where his mother was a nurse and his father a fireman. Lynch won a place at Christ's College, Cambridge, to study engineering before taking a doctorate in mathematical computing, specialising in "adaptive pattern recognition".

A tech pioneer

Before setting up Autonomy in 1996, Lynch cut his entrepreneurial teeth on two tech companies. But what made Lynch's fortune, says the FT, was his "pioneering work in the field of meaning-based computing" a form of intelligent search that sifts unrelated, unstructured bits of data into "valuable information". That proposition went down a storm with blue-chip clients looking to gain an advantage over competitors and Autonomy, which swiftly floated, grew exponentially.

"For a man with a $5bn lawsuit hanging over his head, Lynch seems remarkably upbeat about life," noted the Evening Standard last year. Indeed, throughout his legal war with HP (which has also launched a High Court action against him in the UK), he has continued to champion cutting-edge technology via his new venture capital firm, Invoke Capital. And until last week when he gave up his post as a government adviser and resigned from the Royal Society he remained at the top of Britain's scientific establishment. His freedom now hangs in the balance, says the Telegraph. Lynch is reportedly holed up in his Suffolk manor house mulling his options. Navigating the next few months will "require all his analytical brilliance".




Rishi Sunak: the maharaja of the Yorkshire Dales

Rishi Sunak is taking the reins of the world’s fifth-largest economy at a crucial juncture. The unflashy but likeable youngster may be just the man fo…
20 Feb 2020

Les Wexner: the Merlin of the Mall loses his magic

Les Wexner built a retail empire from scratch and made a fortune in the process. He ended up placing his trust and many powers in the hands of disgrac…
20 Feb 2020

Bernie Ebbers: the downfall of the Telecom Cowboy

Bernie Ebbers had the starring role in the greatest rags-to-riches story in US corporate history. A plot twist at the end turned it into a different k…
10 Feb 2020

Kim Woo-choong: the ambiguous legacy of Daewoo's Chairman Kim

Former Daewoo chairman Kim Woo-choong inspired a generation of entrepreneurs. His empire collapsed and his career ended in ignominy, but was he to bla…
3 Feb 2020

Most Popular

Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Gold is at its highest level in years – here’s how to invest

Gold's rise at a time when the dollar is unnervingly strong isn't unheard of – but it is curious. John Stepek explains what's going on, and what it me…
21 Feb 2020
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019