Agenda M&A Trends. 2. Credit Availability. 3. Trends in M&A Legal Terms. 4. Market Outlook

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Loren Harris
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1 March 20, 2012

2 Agenda M&A Trends 2. Credit Availability 3. Trends in M&A Legal Terms 4. Market Outlook

3 Annual Deal Volumes Overall U.S. M&A Market $1,200, U.S. M&A Transactions by Volume and Value ($mm) 16,000 $1,000,000 13,081 14,018 14,000 11,579 12,000 $800,000 $600,000 9,691 9,846 10,000 8,000 Transaction Values $400,000 6,000 Number of Transactions 4,000 $200,000 2,000 $

4 Annual Average Deal Multiples Overall U.S. M&A Market $1,200, U.S. M&A Average Transaction Multiples and Transaction Values ($mm) $1,134, x $1,000,000 $839,889 $872,773 $887, x 12.0x $800, x $600,000 $681, x Transaction Values EV/Revenue 6.0x EV/EBITDA $400, x $200, x 2.0x $ x

5 Quarterly Deal Volumes Overall U.S. M&A Market $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Q Q U.S. M&A Transactions by Volume and Value ($mm) 3,055 3,211 3,125 3,690 3,597 3,681 3,443 3,297 4,000 3,500 3,000 2,500 2,000 1,500 1, Transaction Values Number of Transactions $ 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4

6 Quarterly Average Deal Multiples Overall U.S. M&A Market $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 Q Q U.S. M&A Average Transaction Multiples and Transaction Values ($mm) $218,771 $192,502 $205,916 $255,583 $217,382 $302,834 $216, x $151, x 12.0x 10.0x 8.0x 6.0x 4.0x Transaction Values EV/Revenue EV/EBITDA $50,000 $ 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 1.3x 2.0x 0.0x

7 M&A Market Breakdown by Transaction Size Overall U.S. M&A Market M&A Activity Breakdown by Size 3,079 transactions, 20.9% of all transactions All Other M&A Transactions 8,679 transactions, 58.8% of all transactions Lower Middle Market (EV of $ mm) Transactions No Transaction Data 3,004 transactions, 20.4% of all transactions

8 2011 Lower Middle Market M&A Activity by Transaction Volume Lower Middle Market M&A 450 Lower Middle Market M&A Activity (Transaction Volume) Technology Services Industrials Distribution Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11

2007-2011 Average Multiples and Deal Volume

9 Average Multiples and Deal Volume Lower Middle Market Private Equity Sponsored Deals

10 Average EV/EBITDA Multiples by Transaction Size Lower Middle Market Private Equity Sponsored Deals 8.0x Total Enterprise Value (TEV) / EBITDA Multiples 7.9x TEV / EBITDA 7.5x 7.0x 6.5x 6.0x 5.5x 5.0x 7.2x 6.1x 5.9x 5.2x Overall Average

11 Buyout Multiples by Deal Size Lower Middle Market Private Equity Sponsored Deals

2007-2011 Buyout Multiples by Deal Quality

12 Buyout Multiples by Deal Quality Lower Middle Market Private Equity Sponsored Deals

13 Global Software M&A $B $120,000 $100,000 $80,000 $60,000 $40,000 3,098 2,679 2,038 2,657 2,922 3,500 3,000 2,500 2,000 1,500 1,000 # of transactions $20, $ Source: CapitalIQ, Mirus Deal value # of Transactions

14 Software M&A Industry-specific software targets will continue to be coveted in 2012 SaaS provides next-generation growth drivers. Verticalization provides improved competitive differentiation & barriers to entry. Specialized software is harder to replicate and still grows at a higher rate and commands higher margins than more horizontal solutions. - Sam Palmisano, IBM CEO

15 Massachusetts M&A Pharmaceuticals and Software dominate M&A activity 81 M&A deals involving Massachusetts targets in 2012 YTD Pharma and Biotech Zoll Medical sold to Asahi Kasei for $2.1 B Boston Biomedical sold to Dainippon Sumitomo Pharma Co. for $2.6 B Software Nuance bought Transcend for $320 million Consumer FoodShouldTasteGood sold to General Mills

16 Agenda M&A Trends 2. Credit Availability 3. Trends in M&A Legal Terms 4. Market Outlook

17 Debt Multiples Debt Multiples

18 Equity and Debt Contributions Debt Multiples

19 Quarterly Senior Debt to LIBOR Spread Debt Multiples

20 Agenda M&A Trends 2. Credit Availability 3. Trends in M&A Legal Terms 4. Market Outlook

21 Trends in M&A Legal Terms Legal terms reported from 90 Private Equity deals in 2011 Indemnification Escrow Holdback Escrow Period Escrow Basket

22 Agenda M&A Trends 2. Credit Availability 3. Trends in M&A Legal Terms 4. Market Outlook

23 Looking Forward What s in store for us in 2012? Deal volumes leveled off in 2011; deal values recovering Strategics and PEGs still flush with cash Significant cash reserves on corporate balance sheets Significant liquidity in PE funds seeking deal opportunities Increasing macroeconomic stability European debt situation US stock market US - improving job market US - low interest rates through at least 2013 Offset by rising oil prices Tax considerations for sellers

Venture Capital Review: 2011 Presentation to Tech Talk Tuesday March 20, 2012 David R.

29 Size of New England Q Series A Transactions by Industry Bio Pharma Medical Devices Cleantech Technology Other <$5 million <$10 million <$15 million <$20 million >$20 million 2012 Foley Hoag LLP. All Rights Reserved. Venture Capital Review:

30 Size of New England Q Series B and Later Round Transactions by Industry Bio Pharma Medical Devices Cleantech Technology Other <$5 million <$10 million <$15 million <$20 million >$20 million 2012 Foley Hoag LLP. All Rights Reserved. Venture Capital Review:

FOLEY HOAG LLP David R. Pierson Partner Seaport West, Boston, Massachusetts Emerging Enterprise Center, Waltham, Massachusetts 617 832 1146 phone 617 753 1450 direct fax dpierson@foleyhoag.com www.

38 FOLEY HOAG LLP David R. Pierson Partner Seaport West, Boston, Massachusetts Emerging Enterprise Center, Waltham, Massachusetts phone direct fax David is a partner at the law firm Foley Hoag LLP. He is a member of the firm s Business Department and chairs its Venture Capital/Emerging Companies Practice Group. David represents a broad range of emerging companies, including companies in the software and technology, life sciences, medical device, and other industries. David also represents U.S. and foreign venture capital firms in connection with their investments throughout the U.S. His work involves advising public and private companies in corporate finance, securities, mergers and acquisitions and general corporate and contract matters, including entity formation, founder arrangements, angel and venture capital financings, equity incentive plans, strategic transactions, and technology licensing and distribution arrangements Foley Hoag LLP. All Rights Reserved. Venture Capital Review:

Financial & Business Highlights For the Year Ended June 30, 2017

Financial & Business Highlights For the Year Ended June, 17 17 16 15 14 13 12 Profit and Loss Account Operating Revenue 858 590 648 415 172 174 Investment gains net 5 162 909 825 322 516 Other 262 146