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  2. Unlike in most mid- and large-cap companies, it’s common for small-cap companies to be operated and governed by those who are either new to public company roles, or by those who lack significant experience operating and governing public companies.
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  4. In any given year, dozens of publicly traded companies move to Nasdaq and NYSE from other trading venues in the United States; i.e., they “uplist.” Uplisting can be a transformative event for a publicly traded company for all the same reasons a traditional IPO can be. But every CEO who has succeeded with their migration to an exchange will attest that it is a multi-year minefield of risks.
  5. Spend enough time in boardrooms, and you will find that transformative governance often starts in innocuous ways. A shift in one board member’s body language may open the door for another board member to interject, and before long, a major risk is avoided, or capital is more efficiently allocated.
  6. Nearly 80 percent of public companies in the United States have market capitalizations below $500 million. Despite the sheer number of small-cap[ii] companies, once you descend below $500 million market capitalization, reliable, constructive[iii], board compensation data is virtually nonexistent for the vast majority of companies – many of whom are unable to budget for commissioned research. This is most evident among life sciences companies, as so many of them have the further complication of being pre-revenue. Given that the majority of shareholder activist campaigns are launched against small-cap companies for boardroom related issues, Small-Cap Institute, Inc., together with research partner ESGAUGE, decided to deliver the elusive data: Board compensation data for life sciences companies with market capitalization below $50 million, between $51 – $100 million, between $101 – $250 million, and between $251 – $500 million. To further illustrate some of the unique attributes of director compensation in small-cap life sciences companies, we’ve also compared those data to director compensation data in similarly-sized, non-life sciences group (NLSG).[iv] Sample Sizes and Data Analyses: each of the four market cap samples in both the Life Sciences group and the NLSG is made up of 10 companies, with approximately 80 to 90 directors in each bracket; smaller companies have fewer directors, therefore each of the sub $50 million brackets were made up of markedly fewer members. The difference in the total number of directors and in the sample sizes of each form of compensation is a result of some directors being listed in compensation tables while not receiving any compensation during the fiscal year in question at all, or not receiving a particular form of compensation. Data is taken from the latest proxy statement available, filed in 2019, detailing compensation paid out in 2018.
  7. One of the reasons why the overwhelming majority of shareholder activism campaigns are in small-cap companies is because there is a pretty substantive disconnect between what investors expect of board members, and what actually happens on a day-to-day basis in many boardrooms. This article aims to succinctly address some of the key issues that give rise to the friction.
  8. For both new and experienced small-cap officers and directors, the menu of potential financing structures can be somewhat intimidating. The purpose of this article is to explain the most common types of small-cap equity and equity-linked financings, and the high-level pros and cons of each.
  9. A recent piece in The Wall Street Journal eluded to a fascinating insight: “Companies appear to avoid hiring auditors that have a history of critical audits at other companies…” Every experienced investor knows that this phenomenon is not solely limited to auditing.
  10. Attention CEOs of small-cap companies who feel like corporate governance is a form-over-substance waste of time: those who run the largest companies in the world, and those who manage trillions of dollars vehemently disagree with you.
  11. Many small-cap companies view investor relations (IR) as a necessary evil, or simply a cost of being a public company. Consequently, they do a poor job of purchasing IR services, and cycle restlessly between different firms. But it doesn’t have to be this way, and it shouldn’t.
  12. Small-cap companies undertake a variety of measures – often under pressure from shorter-term investors or misinformed service providers – aimed at increasing share price sooner versus later. One of them is stock buy-backs. But more often than not, officers and directors of growth companies are taken aback when a buy-back not only has no impact on their stock price, but actually draws the ire of experienced investors.
  13. Considering that greater than 80 percent of shareholder activist campaigns each year are waged against small-cap companies, it is critical for small-caps to communicate clearly about the issues investors care most about. Notwithstanding the fact that annual proxy statements address many of those issues (e.g., board composition, compensation, etc.), too many small-cap boards outsource responsibility for drafting and refining proxies. That’s a big mistake.
  14. A non-deal roadshow, or NDR, is a series of investor meetings not associated with an active deal or active financings. Companies organize NDRs to update existing investors on corporate progress and introduce the company to prospective investors. by James Carbonara, Partner at Hayden IR
  15. Most small-cap companies start off their search for an investment bank on the wrong foot. Here’s a replicable, three-step process to choosing the right investment bank, every time.
  16. At-the-market offerings (ATMs) are unique financing mechanisms, because stock is sold intraday – without a fixed price – into the natural flow of trading. Unlike other financing mechanisms, ATMs provide issuers with a high degree of control over the timing, size, and price of each ATM sale.
  17. Small-cap companies raise $25-$40 billion every year in the equity capital markets, and every special situation fund manager that provides this growth capital would confide in private that most of the financings are needlessly dilutive.
  18. One of the least understood aspects of shepherding a small-cap company is garnering and maintaining sell-side equity research coverage. The goal of this piece is to clear up commonly-held misconceptions.
  19. As Small-Cap Institute, Inc. has discussed, there is widespread confusion among small-cap leaders on the subject of trading volume; i.e., where it actually comes from, where it doesn’t come from, and how to get more of it. One of the most insidious byproducts of this knowledge gap is the astronomical waste of time and money expended by small-cap companies targeting investors who are foreclosed from buying stock due to… illiquidity. The goal of this piece is to provide some buy-side “math” that will obviate such waste in the future.
  20. Small-Cap Institute’s Amanda Gerut interviews Axogen Corporation’s Karen Zaderej. Ms. Zaderej is chairman, CEO, and president of Axogen Corporation (NASDAQ:AXGN). Axogen (AXGN) is the leading company focused specifically on the science, development and commercialization of technologies for peripheral nerve regeneration and repair. Karen served as Chief Executive Officer and as a member of the Board of Directors of Axogen Corporation since May 2010 and as Chief Operating Officer from October 2007 to May 2010 and as Vice President of Marketing and Sales from May 2006 to October 2007.
  21. Small-cap officers and directors often understandably lack a thorough understanding of the “business” of sell-side equity research. Without an accurate rendering of the drivers and economics of the research business, it’s hard to have realistic expectations about garnering and retaining coverage. That said, the business model has seen some material changes, and what drives most research revenue today might surprise you. ...read the article here.
  22. Small-caps often contain directors who are new to the small-cap world, having spent their careers operating, governing, or advising large-cap companies. These board members, and their colleagues, are often surprised – and not in a good way – to learn that many small-cap investors don’t always view their large-cap experience in a positive light. ...read the article here.
  23. D&O insurance, the insurance that is designed to respond when directors and officers are sued by plaintiffs or regulators like the Securities and Exchange Commission, is important for small cap companies. ...read the article here.
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