Activist investor Starboard Value has acquired a $500m stake in software company Autodesk and is advocating for changes at the design software company, Wall Street Journal reported, citing sources.
Sources familiar with the matter stated that Starboard has engaged with Autodesk executives recently to express their concerns and propose alterations, including to the board of directors.
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The investment firm, led by Jeff Smith, has expressed concerns regarding Autodesk’s timing of disclosures about an internal investigation that resulted in the removal of its CFO.
This investigation uncovered that executive had misrepresented free cash flow metrics and operating margins to investors, according to sources.
The findings led to the reassignment of Autodesk’s then-CFO, Deborah Clifford, to another executive role within the company.
This manipulation occurred as Autodesk transitioned to upfront payments from annualised payments, ostensibly to enhance financial metrics.
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By GlobalDataAutodesk first announced the commencement of this internal investigation in April 2024, almost a month after it began and after notifying the Securities and Exchange Commission about examining its financial reports.
The delay in disclosure, which occurred just over a week after the director nomination deadline, has prompted concern at Starboard.
There is suspicion that Autodesk’s board may have intentionally withheld information from shareholders before the annual meeting, potentially restricting their ability to nominate director candidates in a contested election, the sources said.
Starboard is contemplating legal action in the Delaware Chancery court to force the reopening of Autodesk’s nomination window and to postpone the company’s annual meeting, currently scheduled for 16 July 2024.
Beyond these governance issues, Starboard also believes there is potential for Autodesk to realise actual margin improvements and enhance investor communications, which could strengthen the company’s stock value.
Starboard has previously invested in other technology firms including Salesforce, led by Marc Benioff, and Splunk, which Cisco acquired in 2023 for $28bn.
Autodesk, known for its 3D design and engineering software solutions serving various sectors, offers products such as Revit and Fusion 360.
Autodesk is not new to activist attention. It reached a settlement with Sachem Head Capital Management and Eminence Capital in 2016 to avoid a proxy battle.
Earlier this year, Autodesk disclosed ongoing investigations by the Justice Department and the SEC.
Requests for comments from Autodesk did not elicit a response immediately, the publication said.
