NEW YORK (AP) -- Companies dived into the public market during the roaring '90s, when it was easy to

NEW YORK (AP) -- Companies dived into the public market during the roaring '90s, when it was easy to grab capital and turn investors' heads. Now some smaller businesses are quietly retracing their steps to private life.
With share prices declining, thinly traded public companies are finding it harder than ever to attract investors, particularly institutional funds that can boost volume and pique the interest of analysts by buying large chunks of stock.
As post-Enron reforms make running a public company more complicated and costly, a growing number of businesses are deciding that the rewards no longer justify the expense and risk.
"The whole point of being a public company is trying to build capital. So if you can't have access to capital, what's the point?" said David Clark, who took ready-to-eat lunch maker Pierre Foods private last year with partner James Richardson. "The market was just not playing the role for us that it was supposed to ... and it was very expensive."
All in vain
Clark, a former banker, spent days in New York courting analysts and fund managers in a vain attempt to energize the stock, first issued in the 1970s under the name Fresh Foods. At one point a couple of analysts began covering the company but later dropped it without explanation, and the share price fell further.
"We just could not get the big-money guys interested in us," said Clark. "I concluded all along that the only way to get the stock moving was with the institutional players. But we just weren't their kind of company."
Forgotten by analysts, lightly traded and with stock prices that don't reflect their true value, good candidates for going private are sometimes called "public company orphans." They are small- to mid-cap companies that held initial public offerings during happier economic times but can no longer raise capital with their stock.
Until recently, experts say, they've had little incentive to go private. There were only 40 public-to-private deals in 2000, according to Thompson Financial. But last year, there were 71. There have been 29 announced so far this year, including produce leader Dole Foods, cheerleading outfitter Varsity Spirit and catalog retailer Lillian Vernon. More are expected.
For stockholders, a buyout can be good news: Shares are often bought at a premium over the trading price. An amicable deal can also benefit managers by increasing their stake in the surviving company.
New law
One factor that can tip the scales is costs associated with the Sarbanes-Oxley Act, which became law in July after a series of corporate scandals. Aimed at making management more accountable to shareholders, it requires executives to sign off on financial statements and holds them criminally liable for inaccuracies. It also sets new guidelines for board composition and function. All of the accompanying regulations and exchange rules will be phased in by 2005.
Companies preparing for the changes are paying more in audit and legal fees already, and have seen the cost of insuring their directors and officers soar. With board members in short supply, many also have hired search firms to fill vacancies. The added expense can range from $750,000 to more than $1 million a year, said Ed Nusbaum, chief executive of accounting firm Grant Thornton.
A recent survey by law firm Foley & amp; Lardner found executives at mid-cap companies are expecting the price of being public to nearly double, from about $1.3 million now to $2.4 million per year after the reforms are fully implemented.