Stayin' Alive --- Reverse Splits Can Beef Up Beaten-Down Shares
February 28, 2009, Barron’s

In the current market, some companies may consider reverse stock splits as a solution to many challenges, according to White & Case Securities and Capital Markets partner Adele Hogan.

"Reverse stock splits are a win-win for shareholders and companies, particularly when paired with a reduction in authorized capital," says Hogan. "A reverse stock split gives companies a mechanism for retaining investor confidence and for weathering market downturns."

Reverse splits can also prevent a company from being delisted, although some exchanges have suspended their minimum listing requirements for the time being. "Once you're delisted," Hogan says, "it's extremely difficult to continue to be viewed as a viable company." Reverse splits can also prevent stocks from falling below a minimum where "mutual funds and other institutional investors may not be allowed to invest in those shares."