Small cap companies have increasingly become targets of activist investors as established activists and new hedge funds enter the space. While small cap companies may have fewer resources to monitor shareholders and prepare defenses, responding to activists in a hostile manner is often a mistake. Proxy contests at small cap companies can be cost effective for activists if budgets are managed properly. ISS and other proxy advisors apply the same evaluation framework regardless of company size, so small caps must prepare thoroughly. Retail investors may support activists when there are clear issues with a company's performance or governance. Activists research companies extensively and seek catalysts to increase share prices, so legal maneuvers alone will not dissuade determined activists.