Some of Acme Inc.'s shareholders are very dissatisfied with the performance of the firm's current management team and want to gain control of the board. To do so, these shareholders offer their own slate of candidates for open spaces on the firm's board of directors. Lacking the necessary votes to elect these candidates, they are contacting other shareholders and asking them to vote for their slate of candidates. The firm's existing management and board is asking shareholders to vote for the candidates they have proposed to fill vacant seats on the board. Which of the following terms best describes this scenario?

Question

Quizplus · Accepted Answer

This scenario describes a proxy contest, in which a group of shareholders seeks to gain control of a company's board of directors by soliciting votes from other shareholders for their own slate of candidates. A leveraged buyout involves acquiring a company using a significant amount of debt financing, while a merger involves the combination of two companies into a single entity. A divestiture involves the sale or disposal of a company's assets or business units. None of these terms accurately describe the situation described in the scenario.