Retail investors are increasingly shaping corporate governance and M&A transactions, driven by the availability of 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 report 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% of all US stocks are held directly by retail shareholders. Additionally, they anticipate U.S. retail investors will purchase $450 billion in shares in 2025, underscoring their significant 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% 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% of shareholder meetings, only 30% 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% 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.

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.

Conclusion

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.