This business, as most readers also know, has been undergoing a massive consolidation for over ten years now – driven mainly by dramatically falling unit volumes as shareholders continue to migrate to ‘street-name.’ The result; a do-or-die competitive environment.
Over just a few years we saw Mellon Bank merge with Bank of New York – to pass up former number-one transfer agent Computershare’s once commanding market share by a country mile. And then, rather amazingly, Computershare bought out the BNY-Mellon business to take a basically insurmountable lead…And then – as so often happens with rapidly consolidating businesses – came a new entrant, Broadridge Financial Solutions, which promised to follow a ‘disruptive’ business model. And then, just last year, we saw one of the two largest agents in the mid-sized-agent category, Registrar and Transfer Company, also sell its business to Computershare. And then…one of the largest of the ‘smaller agents’ – Illinois Stock Transfer, was shut down by the SEC…And then, just a few months ago, another of the biggest ‘small agents’ – albeit a tiny one – was snapped up by AST.
But now, suddenly, the competitive turmoil – which so often created “dislocations” for clients, to put it politely, and where the now number-two agent, Wells Fargo Shareowner Services had been ‘making hay’ as the saying goes – seems to have simmered down: All of the larger players still standing have found their feet, and are doing an “”OK job.” So not only are the clients basically pretty happy – very few of them have a good reason to shop around and run the risk of leaving a stable environment for what is still the “unknown”…since one thing is for sure, we say: “The dealin’s are far from done in this industry.”
Currently, the reorg departments at the larger agents are sort of feasting on the hot and heavy M&A market – and picking up a few newly spun-off companies too. But once those dealin’s are done, the number of registered shareholders, net of the few modest additions from spin-offs, will bite the bottom lines of the big TAs pretty hard.
So for now, are advice is to sit tight, and to try to develop a warm and loving relationship with your TA, while keeping a close eye on the newspapers and the industry newsletters for more consolidation to come.
But if you are one of the ‘disaffected’ companies, or feel ‘dislocated’ after the competitive reshufflings, here are two articles that will help you; one on “What to do if you are not satisfied with your T-A” and another on "selecting a transfer agent.'