A new activist, Privet Fund Management LLC, is launching a proxy contest seeking to install four dissident directors to the board of Potbelly Corp.  (PBPB) - Get Report , a restaurant chain that already has installed a dissident director and one which The Deal has learned had received multiple expressions of interest from private equity firms.

The new proxy war emerges after Potbelly announced Oct. 5 that it had added Joseph Boehm of activist fund Ancora Advisors LLC to its board and strategic review committee in a move that expanded the board from seven to eight.

Potbelly announced in August that it had hired JPMorgan Securities LLC to advise it on a strategic review. The Deal reported on Dec. 28, citing sources familiar with the situation, that Potbelly had received multiple expressions of interest from private equity firms at prices in the mid-teens. An acquisition of Potbelly in the mid-teens would represent a premium to the company's recent $11.95 a share price.

The Deal has learned, citing a person familiar with the situation, that Privet has launched the contest as a placeholder in case the company's strategic review doesn't conclude in a sale. He added that investors will know most likely by the end of February whether a sale will take place. If no sale emerges, he expects Privet to move forward with the director contest. 

Should Privet Fund win its contest, which would take place at an annual meeting in May, it would put activist-backed board members in control of the business and likely drive a sale of the restaurant chain then. The activist fund, based in Atlanta, Ga., is no stranger to activism. According to FactSet, Privet has launched 24 campaigns including five proxy fights since forming in 2011.

"Should the company's process not culminate in a desirable outcome, we believe substantial changes need to be made to the board without further delay," Privet said in a statement.

The nominees include Ryan Levenson, and Ben Rosenzweig, portfolio manager and partner at Privet respectively. Privet also nominated William Mitchell, President at Dunkin' Brands, Michael Steuert, an ex-VP at Fluor Corp.

The new contest emerged after Aylwin Lewis, the chain's CEO, left in August. On Dec. 1, Potbelly announced that its board of directors has appointed a new CEO, Alan Johnson, who had served as CEO of BevMo!, a specialty alcoholic beverage retailer. The appointment of Johnson may indicate that Potbelly could be focusing on remaining independent upon the conclusion of its strategic review.

That move likely didn't sit well with the activists at the gate, including Ancora Advisers, and it probably motivated Privet to jump into action.

Before Boehm joined the board, Ancora had also pushed Potbelly to consider refranchising at least part of its 413 company-owned locations and improve margins through the use of technology. The firm has said that if Potbelly did not enact these changes it would push for a sale. However, it is likely that any consideration of real estate monetization was put on hold once the strategic review was launched, especially considering that potential buyers would likely want to consider sale-leasebacks as part of their own strategy post-acquisition. 

Privet owns a 5.22% Potbelly stake and Ancora has a 4.7% position. Two other funds, GrizzlyRock Capital and Vivaldi Asset Management LLC, 5.3% position holders, in October urged Potbelly to disclose all material steps J.P. Morgan had taken as Potbelly's financial adviser, a move suggesting that the funds didn't believe the investment bank was conducting a thorough strategic review.

Privet launched its contest just a few days before Potbelly's Feb. 10 deadline for director nominations for its 2018 annual meeting.

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