Assume that 20% of the shareholders of ABC Co. are extremely unhappy with the company's management and would like to replace all of the senior executives. To do this, they need control
Over the board of directors. This situation has a high probability of leading to a:
A) Conglomerate acquisition.
B) Going private transaction.
C) Management buyout.
D) Proxy contest.
E) Pooling of interests.

Question

Quizplus · Accepted Answer

The best choice in this situation is a proxy contest, which is a method used by shareholders to vote on changes to a company's leadership or other major decisions. In this case, the dissatisfied shareholders would attempt to gain control of the board of directors by soliciting proxies from other shareholders to vote for their preferred candidates. A proxy contest is a common and effective way for shareholders to try to change a company's management or strategy. The other choices, such as a conglomerate acquisition or going private transaction, do not make sense in this situation. A management buyout might be possible if the unhappy shareholders were part of the existing management team, but that is not mentioned in the scenario. A pooling of interests is a type of accounting method used in mergers and acquisitions and is not relevant to this scenario.

Assume That 20% of the Shareholders of ABC Co