What is a proxy contest?

A proxy contest is indeed a strategy for takeover without buying shares directly. In this scenario, shareholders are solicited to allow another party, often a potential acquirer or activist investor, to vote on their behalf in corporate governance matters. This enables the party to attempt to gain control over the company's board of directors and influence decision-making, often with the goal of effecting significant changes in management or corporate strategy.

By using proxies, the party initiating the contest can potentially achieve influence and control without needing to purchase a majority of the shares outright. This approach is particularly attractive because it allows the acquiring party to avoid the substantial costs that can accompany direct share acquisition, and it can also create a more favorable environment for management change if the existing board is resistant to different initiatives.

In contrast, the other options do not effectively describe a proxy contest. A type of merger refers to the consolidation of companies, which involves a different set of dynamics and negotiations. A method for acquiring shares might seem related, but proxy contests focus more on shareholder empowerment and governance rather than direct acquisition of stock. Lastly, a legal process for liquidation of assets pertains to winding down a company’s operations and does not relate to the strategic maneuvering of control via shareholder votes.