Beyond the deal: Why shareholder experience is the hidden risk in mining's M&A boom

The Australian mining sector is alive with activity.  Big deals are being done. But what becomes of the shareholders? And what are the real risks of a poor shareholder experience?

With S&P Global reporting a 32% year-on-year jump in merger and acquisition deals in early 2024, it is clear consolidation is the defining trend. From landmark gold takeovers such as Northern Star Resources’ acquisition of De Grey Mining to pivotal moves in the energy space, such as Rio Tinto’s acquisition of Arcadium Lithium, leadership teams are rightly focused on asset integration, operational synergies, and strengthening balance sheets.

However, amid the immense pressure to deliver on the deal’s promise, a critical question is often overlooked: what happens to the shareholders?

In the high-stakes environment of a merger, the challenge of uniting two distinct sets of investors into a single, engaged community is formidable. Get it right, and you build a foundation of trust that can bolster your share price for years. Get it wrong, and the consequences can be severe. 

A clunky, impersonal, or confusing post-merger experience for investors doesn't just create frustration. It can also breed uncertainty, fuel market volatility, and even attract shareholder activism at a time of maximum vulnerability.

This is the hidden risk in M&A: a poor shareholder experience.

More than a register – the overlooked asset 

For too long, the share registry has been viewed as a passive, back-office administrative function – a simple list of names. 

This purely administrative view is no longer sufficient to meet the strategic demands of a modern listed company. Progressive leaders are no longer asking: “Is my registry compliant?” They are asking: “How can our registry help us build deeper trust and stronger relationships with our investors?”

Enduring trust from shareholders isn’t built overnight. It’s the outcome of repeated, positive experiences, where every touchpoint – from a formal announcement to a simple online portal – combines to create a feeling of respect and understanding.

Ultimately, the registry becomes the primary tool through which a company can deliver these consistent experiences and convert shareholder data into genuine shareholder trust.

The three pillars of a modern shareholder experience

Based on our work with listed companies navigating these exact challenges, a successful approach is built on three strategic pillars.

1. From ‘one-size-fits-all’ to tailored engagement

The modern mining register is complex. It’s a mix of retail investors, global institutions, joint venture partners, and critically, employees holding shares via nuanced incentive plans. A generic, one-size-fits-all registry platform cannot effectively service these diverse groups. Mining leaders are finding a tailored approach is essential. One that can seamlessly manage the specific complexities of the resources sector, from retaining key talent through a merger with reliable employee share plans, to providing sophisticated reporting for institutional partners.

2. A single source of truth for building trust

Imagine this: you've just delivered a major market announcement. A board member asks for an immediate analysis of how the market is reacting and who is trading your stock. Can you provide it in real-time, or does it take days? For today’s leaders, having a single, cloud-native platform where the company and its investors see the same real-time data is fundamental. This single source of truth moves the registry from a historical record to a live strategic tool, fostering confidence from the board down to the newest retail shareholder.

3. The employee shareholder experience

In the competitive race for talent, particularly within the resources sector, how a company engages its own team can be its greatest strategic advantage. While an employee share plan  is often positioned as a key retention tool, its true potential is rarely unlocked. Too often, an ESP exists as a complex, abstract benefit in a document, leaving employees confused about its real value and disconnected from the feeling of ownership.

A modern, transparent platform changes this dynamic entirely.

When it functions as a clear and intuitive part of an employee’s financial world, it transforms share ownership from a confusing perk into a powerful source of connection. Whether it’s an executive on the board or a fly-in, fly-out worker on site, giving every team member the ability to easily see and understand the value of their holding fosters a profound sense of shared ownership. It turns a benefit into a source of pride, aligning the entire company towards a common goal and significantly boosting retention.

The foundation of service

Underpinning all of this is a simple, non-negotiable principle: quality, proactive service. The most advanced technology is only as good as the expert human support behind it. Having a dedicated, Australian-based team that can provide immediate support to your executives and shareholders alike is the essential foundation for any strategic approach.

In this dynamic era of consolidation, the mining companies that thrive will be those that recognise that their shareholders are more than just names on a register. The future of investor relations will be won not just in the boardroom, but in the seamless, transparent, and respectful experience provided to every single one of those shareholders.

David Raper is chief executive officer of investor administration and services provider Automic Group. His 25-year executive career has been dedicated to building highly regulated financial infrastructure, combining deep operational knowledge from leading markets at the Australian Securities Exchange.

This article was featured in Mining Monthly.

See the article at https://www.miningmonthly.com/opinion/opinion-articles/4519145/deal-shareholder-experience-hidden-risk-minings-boom.