UPRR’s Acquisition by Keane – Six Months Later

This transaction in December 2014 was a game changer in the lost shareholder search and escheatment industry.  The merger of the two largest players in this field created a behemoth with an over 80% market share.  The question is, has it enhanced or diminished consumer options and service quality?

Specifically, Keane acquired Unclaimed Property Recovery & Reporting, LLC and its wholly owned subsidiary, UPRR Securities LLC, a registered Broker-Dealer (UPRR).  This was the third transaction in five years involving Keane and private equity firms.  In 2009 a press release reported SMS Vanacore received significant investment from DFW Capital Partners and changed its name to Venio.  In 2010, Venio/DFW, with significant assistance by Maranon Capital of Chicago, acquired Keane, keeping Venio’s Michael J. O’Donnell as CEO of the combined entity – which retained the Keane name.

In 2014, Marketwired via COMTEX reported that Lovell Minnick Partners, an independent private equity firm, obtained $17 million of secured debt from Prospect Capital Corporation of New York to aid in its acquisition of Keane from DFW/Maranon.  One year later, Lovell Minnick seized the opportunity to acquire UPRR and its associated market share and revenue.

According to a December 2014 press release, Keane’s O’Donnell said “This acquisition is ideal for the industry, as the services offered by both Keane and UPRR complement each other perfectly.”  Indeed, the implication of these two industry giants’ consolidation could have been:

  • Full disclosure of the asset identity for all account values, which was an integral part of the UPRR model
  • A broader approach in locating living investors, since Keane formerly concentrated on estates of deceased shareholders only
  • Staff that represented the best talent of both firms

In fact, however, observers are pointing to these realities:

  • Ownership of any entity by a private equity firm can dampen its entrepreneurial spirit
  • This means focus can tend to be on today’s P&L statement rather than on tomorrow’s service opportunities
  • Since December 2014 there has been a significant reduction in UPRR and Keane staff, including the loss or defection of a number of experienced senior officers
  • There may be, as a result of financial necessity at Keane, an abandonment of various services including escheatment for clients like small transfer agents, and corporations with non-equity property types
  • There may also be less latitude to broadly interpret what is best for the “found” shareholder in deference to preservation of Keane’s bottom line
  • There is one less firm to help corporations combat predatory state audits facilitated by Verus Financial and Kelmar
  • As a happier result, transfer agents like Computershare, with its ownership of Georgeson, and AST, with affiliate LINK, as well as Laurel Hill and the new independent Abandoned Property Advisors, seem to be aggressively nipping at Keane’s heels to keep it focused on service breadth and quality

While these observations raise concerns, it may be too soon to give the Keane/UPRR deal less than a high mark.  After all, six months is not enough time for all the dust to settle, and we assume Keane/O’Donnell (and Lovell Minnick) are listening to what the market wants of them.

One thing is certain:  abandoned property rules and regulations are some of the most daunting, legally and financially, that Corporate America faces these days, and therefore making sure all available resources are in place and aligned (transfer agents, advisors we have discussed and others) should be a top priority at every company, of every size.