Retail investors are an expanding block that must be engaged strategically
Retail investors are increasingly shaping corporate governance and M&A transactions, driven by accessible financial platforms and a growing willingness to exercise their shareholder voting rights. Unlike institutional investors, who have historically dominated shareholder votes, retail investors represent a dynamic and expanding bloc that companies must engage strategically. This article examines the rise of retail investor influence, key drivers of their participation and actionable strategies for corporations to leverage this trend in critical M&A votes.
The growing influence of retail investors
Retail investors are becoming a pivotal force in US markets. According to Goldman Sachs it is estimated that 38 percent of all US stocks are held directly by retail shareholders. In addition, they expect US, retail investors to purchase $450 bn in shares in 2025, underscoring their economic impact. Younger investors, particularly millennials, are driving this trend.
This group however participates in corporate elections at a far lesser rate than their institutional counterparts. Our analysis of hundreds of shareholder meetings in 2025 found that barely 30 percent of retail shareholders vote in shareholder meetings, without solicitation. That number easily doubles when retail engagement strategies are deployed.
Drivers of retail investor engagement
The surge in retail investor ownership is largely attributable to digital innovation. Online commission free, trading platforms, such as Robinhood, have democratized access to financial markets, with Robinhood reporting 25.2 million accounts at the end of 2024 compared with 5.1 million at the end of 2019.
Social media platforms, including Reddit, Stock Twits, Yahoo and emerging social investing platforms like Traderverse.io have further amplified ownership and engagement by fostering discussions on investing and voting strategies for retail heavy stocks.
Strategic engagement with retail investors
Engaging retail investors requires a shift from traditional approaches. While institutional investors participate in 92 percent of shareholder meetings, only 30 percent of retail investors are currently active, presenting both a challenge and an opportunity. Long gone are the days when proxy solicitors could just pick up the phone and ask shareholders to vote.
We estimate that 50 percent of all small cap M&A transactions succeed because active solicitation of the retail shareholders pushed the vote over the needed threshold. Companies must adopt proactive, transparent and digital-first strategies to mobilize this group effectively.
Key strategies include:
• Shareholder identification: Understanding the demographics and holdings of retail investors enables targeted outreach. There is no one size fits all strategy, different tools are deployed to reach different share sizes. For example, an outbound telephone campaign to the smallest shareholder grouping is not cost effective but a text or email to vote campaign will bring in votes at a much better cost per vote number.
• Dynamic communication: Retail investors, particularly younger demographics, respond to digital campaigns, targeted social media engagement, and transparent messaging. For example, Disney’s $40 mn campaign to defeat Trian Partners demonstrates the value of robust, multi-channel outreach.
• Retail engagement must be prioritized: Early planning is critical. In many M&A transactions retail engagement is flat out ignored until the very end when the vote is not materializing as planned. Retail engagement takes time to implement and to produce votes, so it must be part of the overall solicitation strategy at the beginning of each transaction.
• Retail shareholders support management: One thing has not changed is that retail shareholders vote in low numbers, but when they do vote they overwhelming support management with more than 90 percent support. Therefore, retail must be part of the strategy to secure management friendly blocks of votes. By prioritizing retail engagement, companies can strengthen their position in M&A, proxy battles and other critical votes.
Looking ahead
Retail investor influence is poised to grow further and as institutional activism continues to rise, retail investors offer a strategic counterbalance for executives navigating governance challenges.
To capitalize on this opportunity, companies should partner with shareholder advisory firms to identify retail investors and tailor engagement strategies. By investing in these relationships early, corporations can build a loyal retail shareholder base to support long-term success.
The rise of retail investors marks a transformative shift in corporate governance and M&A transactions. By leveraging digital tools, transparent communication and targeted outreach, companies can harness this growing bloc to influence M&A votes and other pivotal decisions. Proactive engagement, informed by data and expert guidance, will be critical for executives seeking to navigate this evolving landscape effectively.
W Sam Chandoha is CMO and Strategic Advisor at Alliance Advisors
