The medical device industry has, for a long time, separated naturally into big players and small. But recent consolidation, particularly in areas such as cardiovascular and orthopedic devices, has created an exaggerated dichotomy, with billion-dollar giants on one end, tiny start-ups on the other, and virtually no one in the middle. Now, a small group of investors--among them, Warburg Pincus and Galen Partners-- is trying to find value in what has traditionally been a device company's no man's land, by putting together small and mid-sized companies.

First Chicago Equipty Capital, acting with advice from Garrett Capital Advisors LLC, formed LifeStream International LLC, a cardiopulmonary products company, out of three recent acquisitions: the cardiopulmonary products division of CR Bard Inc., certain assets of the cardiosurgery business of Minntech Corp., and Surgimedics Inc.,