Hiring a transfer agent to manage your securities transactions and stock ledger has many advantages, even for private companies. However, striking the right deal that meets your needs is something you shouldn’t take lightly. Negotiating the right deal doesn’t always mean getting the lowest possible price.  It is equally important to consider other factors such as turnaround times, payment terms, technology and features, and the quality of the service. Here are nine ways that will come in handy when making a deal with a transfer agent:

  1. Due diligence: It is well worth your time. First, compile a provisional list of transfer agents and compare them in terms of price, services provided, experience, and reputation. Next, narrow down your list to 2-3 service providers, depending on your requirements.
    Check the agent’s credentials and reputation. A knowledgeable and experienced transfer agent knows the complexity of your business and has the insights to take care of any unsuspected setbacks.
  2. Determine your company’s nature: A large part of your negotiation strategy will be determined by whether you are a public company, a private company, or a startup. For example, If you are a private company, the number of transactions may be lower compared to public companies. Additionally, if your company is in the Fortune 500, you may consider using a transfer agent with the capabilities and track record to meet your needs. Likewise, if your company is mid to small-cap, you may be overpaying at a larger firm and feel neglected along the way. So, negotiate accordingly.
  3. Set Objectives: Another important consideration that you may want to think over other than the price before negotiating a deal is the overall added-value that the transfer agent can provide. While asking for a better price can’t hurt, remember the old saying, “you get what you pay for.” Don’t compromise on the quality of service and other features that might make your life a lot easier down the road. Having a clear idea of what you can and can’t live without will ensure that you get your preferred outcome.
  4. Define your services and bundle up: Sometimes, you need only your cap table managed, and then there are times when you may want it all, especially if you are planning an IPO, crowdfunding, or something similar. Strike a deal based on that!
  5. Conducting Negotiations: Ensure that your negotiating team matches the seniority of the service provider’s representatives. For example, please do not send a junior account manager to bargain with their VP of services. State points you are happy with, and the ones you want to discuss, ask the agent to do the same. You can insist on using your terms and conditions but know where to draw the line.
  6. Discounts: Ask for a “loyalty” discount, especially if you are hiring the same transfer agent again. Transfer Agents realize the worth of working with repeat clients and are willing to accommodate you. These discounts need not always be in terms of money and can include extra benefits or services. Ask for a “conquest” discount if you are hiring a new agent.
  7. Mutual Benefits: Negotiate for what you estimate is realistic. The contractual agreement should be a win-win situation, and both ends should gain without crushing the other party’s interest, or you may pay for it later. So, while you ask for discounts and extra benefits in your favor, be willing to listen to what the salesperson has to say and settle down for less. Remember, this is not a fish market, and haggling is a big NO!
  8. Make an Offer: This is where your due diligence will come in handy. Please talk about your ideas in terms of needs and services and offer them a deal. Your transfer agent will accommodate your interests if he sees you are a serious investor.
    And last very important:
  9. Break the Impasse: A deadlock can happen if both parties are unable to agree for various reasons. Think of your agent’s worth and consider breaking the impasse. You can do so through a gradual approach to a sticky situation, introducing a mediator, or changing the negotiating teams if need be.

Remember, getting the best possible deal in the short-term is essential, but a good relationship in the future may help you get even lower prices or other perks. Never underestimate the importance of goodwill and class.

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