In a “proxy fight,” what is an activist investor attempting to achieve?

In a “proxy fight,” an activist investor typically aims to influence the company’s management and strategic decisions by soliciting the votes of other shareholders. The primary goal is to push for significant changes, which often includes advocating for a sale of the company or prompting a merger to enhance shareholder value.

This method is generally employed when activists believe that the current leadership is not acting in the best interests of shareholders or when there’s an underperforming asset that could be more valuable to a buyer than under the current management. Therefore, the activist investor seeks to gain enough support from other shareholders to take control of the board or to implement their proposed changes, which could include initiating a sale of the company.

The focus on a sale can manifest in pushing the company to explore strategic alternatives or to engage with prospective buyers, aiming to maximize the value for shareholders. In this context, the activist’s major intention aligns with influencing corporate control and decision-making through engaging shareholders in the proxy voting process.