Covering the Bases

Originally Published MX September/October 2002

FINANCE

Covering the Bases

For publicly held small-cap healthcare companies, the first step toward maximizing market value is to get known among investors.

Chris Sassouni

Structural changes in the U.S. stock market have made access to capital increasingly difficult for emerging growth companies, particularly those with large capital needs such as high technology, telecommunications, and biotechnology companies. These structural changes have been brought about largely by massive inflows of cash into the U.S. stock market during the latter half of the 1990s. In turn, these inflows have been driven by investors seeking superior returns in an era of low inflation and low interest rates on fixed-income and money market instruments.

As described below, the massive inflows of cash into the U.S. equity markets have forced institutional investors to change the way they manage their portfolios—and especially to focus on and invest in larger and larger companies. Whereas 10 years ago, there was significant institutional interest