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Running head: STRATEGIC FINANCIAL PLANNING

Strategic Financial Planning
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STRATEGIC FINANCIAL PLANNING
Introduction
Starboard Value Limited Partnership was founded by Mark Mitchell and Jeffrey Smith in
2002. The company is an investment adviser with a fundamental and focused approach to invest
in underperforming listed companies in the United States. Starboard Value seeks to venture into
publicly traded companies that are much undervalued and actively engage with the board of
directors and management teams to identify and exploit opportunities that can maximize
shareholder's value (Starboard, 2020).
Starboard has built its image as a powerful player in the activist hedge industry by winning
more seats in various company boards. Recently Smith took control of Darden Restaurant,
Longhorn Steakhouse, and Olive Garden, making Starboard a successful activist (Cohan, 2020).
The company nominates firms that experience a decline in share prices as potential businesses to
invest in. A company like Yahoo is experiencing difficulties as other companies like Google are
rising and require restructuring. Yahoo, which is based in Sunnyvale, provides internet services
globally and is owned by Verizon Communications since 2017.
Question 1
Criteria and methodology of Starboard
Starboard Value investment criteria start with an analysis and evaluation of a company to
derive a fundamental understanding of its portfolios, competitive positioning, and end markets.
(Cohan, 2020) When considering a company to invest in, Starboard compiles data from various
public sources. The information includes primary research findings and interviews with industry
consultants, executives, partners, lenders, customers, competitors, and other shareholders.
Starboard then evaluates each company with an open mind, ensuring that constructive discussions

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are made with management relating to strategies at the corporate level and their future aspiration
(Benoit, 2020).
The company uses a basic methodology with a focused approach to investing, identifying,
and locating undervalued companies (Francis, 2020). The company identifies small-cap companies
that publicly trade their shares in the United States securities markets. Most of the Starboard Value
investments are in the consumer discretionary sector. The investments in the consumer sector
accounts for over a third of the company's total assets. Starboard Value also invests in information
technology, materials, finance, and industries.
The company searches for companies that are underperforming in these sectors and then
invest in them. After making a substantial investment, Starboard goes ahead to advise. It assists
the board of directors on opportunities and strategies to unlock value for all shareholders' benefit
(Benoit, 2020). Starboard Value L.P. engages in a sophisticated and comprehensive analysis of
governance structures, corporate valuations, organizational voting policies, and ownership
sentiments (Francis, 2020). Every section of this analysis is done before holding discussions with
management of the target company on strategy, operations, and finance that need changing.
Starboard Value uses processes-based criteria and methodology to identify, select, and
exert control over an activist investment target. The process includes the following steps:
Identification of undervalued stock
Starboard use-value screening criteria propounded by Benjamin Graham and David Dodd
help identify securities with margin of safety. Value screening, also called value investing, helps
Starboard to search for underperforming companies which has hidden value that can be unlocked.
Financial ratios such as current ratio, return on investment, price to free cash flow, and other

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metrics are used to identify undervalued shares. The company then purchases stock that enables it
to become a minor shareholder, and the owner i...