New York – What is the value to institutional investors of a one-on-one meeting with corporate management? Based on some calculations from The Wall Street Transcript (TWST), a corporate access meeting included in a conference is worth approximately $4,500 on average. Meetings during non-deal roadshows are worth more, perhaps averaging $7,500 to $10,000.
A recent newsletter from TWST’s corporate access product, MeetMax CAM, derives the figures from the recently released Greenwich Associates’ US Equity Investors Study, which we wrote about earlier. Greenwich estimates $6.4 billion in 2010 commission payments from US investors for research, corporate access and other advisory services. Of this, Greenwich attributed 14%, or slightly under $.9 billion, to compensate sponsors of research conferences, which typically center around 1×1 meetings with management.
TWST estimates that there are around 200,000 one-on-one meetings per year at research conferences, and dividing this into the $.9 billion yields an average of $4,500 per meeting. TWST offers software which allows sell side firms to manage their corporate access programs, a market which is mostly concentrated in products from three firms: TWST, Ipreo and Dealogic. TWST’s estimates of volume are based on the volume of meetings generated by clients adjusted by its market share.
Greenwich estimates that 19% of the $6.4 billion, or slightly over $1.2 billion, is spent by US investors to reward brokers for the facilitation of access to corporate management teams. The volume of these non-deal roadshows is much harder to estimate than 1×1’s set up during conferences because so many sell-side firms offer them, according to Caspar Luard, head of business development for TWST. Nevertheless, a rough estimate of the average fee might be $7,500 to $10,000.
The reality is that corporate access fees are a spectrum, according to Luard. The spectrum might range from $1,000 at the low end to $20,000 or higher at the high end. As our US Small Cap survey showed, access to small cap company management is not valued highly by investors, in part because it is something they can easily do themselves. Access to C-level executives of mega-cap companies are a different value proposition. A one-on-one meeting with Steve Jobs of Apple would be worth a great deal. There is a also a premium for visits by company management to investors’ offices, as opposed to meetings during conferences.
It also remains to be seen whether new competition into the corporate access space will change the fee structure. Liquidnet launched its Insight offering about a year ago, BNY ConvergEx and Capital Institutional Services (CAPIS) announced access products at the beginning of the year, and Instinet launched Meet the Street, LLC in March. At a minimum, the new entrants will bring more transparency to the pricing of corporate access, which has been traditionally bundled with proprietary research and execution provided by full-service brokers. As access pricing gets more transparent, TWST’s estimates will get easier to make.