An attempt to gain control of a ﬁrm by soliciting a suﬃcient number of shareholder votes to replace the current board of directors is called a:
A) Tender offer.
B) Proxy contest.
C) Going-private transaction.
D) Leveraged buyout.
E) Consolidation.

Question

Quizplus · Accepted Answer

The definition given in the question matches a proxy contest, which is an attempt by an outsider to gain control of a company by soliciting proxy votes from shareholders to replace the current board of directors. Tender offer is an attempt by an acquirer to gain control of a company by buying shares directly from shareholders. Going-private transaction is a process whereby a publicly-traded company is taken private by its management or an outside investor. Leveraged buyout is a transaction where a company is acquired using a significant amount of debt financing. Consolidation is the process where two companies merge to form a new entity.

An Attempt to Gain Control of a ﬁRm by Soliciting