The Private Equity Value Proposition How Real Is It ?

1. The Private Equity Value PropositionHow Real Is It ? Moderator Peter WolkenVice Chairman, Executive Advisory Board Thunderbird Private Equity Center (TPEC)

2. Frog on the Golf Course

3. Panelists • Jonathan E. Cole, Partner • Edwards Angell Palmer & Dodge LLP • Frederic Sicre, Executive Director • Abraaj Capital, LLC • John Vester, Partner • Transaction Advisory Services, Ernst & Young

4. Jonathan E. Cole, Partner • Edwards Angell Palmer & Dodge LLP • 36 years experience • Leveraged buyouts • Emerging technology • Brown University • Harvard Law School

5. Frederic Sicre, Executive DirectorAbraaj Capital, LLC, Dubai, UAE 16 years experience Established World Economic Forum in Africa & Middle East Managing Director of WEF MBA, IMD, Switzerland BS Villanova University Stanford University Fellow

6. John Vester, Partner Transaction Advisory Services, Ernst & Young 20 years of experience Now at E & Y on US East Coast Former Head of Corporate Development at Xerox Management Consultant at McKinsey MBA Cornell University MS Electrical Engineering from Yale BS Industrial Engineering, Northwestern

7. Topics of Discussion • Do VC and PE “Buyout” firms add value to their portfolio companies? • To Society? • Impact on labor, taxes, corporate governance and innovation • Does PE strengthen business?

8. Venture Capital Firms • VC Firms clearly add value • Most of the job creation has been the result of VC funded entrepreneurial start-ups, especially in information technology • Over 10 million industrial jobs created in the past 30 years by VC funded start-ups • One new job in industry creates another ten in the service sectors, so the vast majority of new jobs are created by VCs.

9. Do PE Buyouts add value? • The jury is still out on recent mega- buyout deals • However, the panelists will support the premise that significant value is being added • Over 85% of investment has gone into the buyout sector • Returns on buyouts can be much quicker than early-stage VC deals • And the risk is much lower when investing in established companies

10. Market Cap of Recent US Venture Backed IPO’s • VM Ware VMW $ 16.4 Billion ! • NetSuite N $ 1.32 Billion • Data Domain DDVP $ 1.32 Billion • Cavium Networks CAVM $ 675 Million • eHealth EHTH $ 551 Million • CommVault CVLT $ 469 Million • Acme Packet APKT $ 463 Million • Mellanox MLNX $ 424 Million • DivX DIVX $ 248 Million March 31, 2008

11. VM Ware VMW • Palo Alto, California firm • Started in 1998 • CEO is Diane Greene • Has 5,000 employees • Virtualization Software • Market Cap is $ 16 Billion • Was $ 40 Billion that at the peak, 3 months after the IPO

12. Global IPO Activity at Record High in 2007 Over $ 255 Billion Raised in 1739 IPOs

13. European Venture Backed IPOs in 2007 • 38 firms raised € 894 million • Down 49% from 2006 • Median amount raised was € 15.8 million • Median pre-valuation was € 59 million • Median time from initial financing to IPO was 6.9 years

14. M & A Activity Robust in 2007 Cisco acquiring again • Signal Works $ 14 M Linksys $ 500 M • Arroyo Video $ 92 M Actona $ 82 M • Reactivity $ 135 M P-Cube $ 200 M • Navini Net $ 330 M Securent $ 100 M • NetSolve $ 128 M Fine Ground $ 70 M • DynamicsSoft $ 55 M IronPort Sys $ 830 M • Perfigo $ 74 M Meetinghouse $ 44 M • Orative $ 32 M Protego Net $ 65 M • Sheer Net $ 97 M Airespace $ 450 M • Scientific Atlanta $ 6.9 B Topspin $ 250 M • WebEx $ 3.2 B Total, 21 firms $ 13.6 Billion Source: PricewaterhouseCoopers/NVCA Money Tree Report, February 2008

15. What This Means • So, VC and Buyouts both represent good opportunities if purchased right • We have seen the data and both asset classes have outperformed • I’ll kick off the discussion with a few questions for the panelists • Then we welcome your questions

16. Next Steps • Please direct your questions to one of the panelists or to the group • e mail me if you wish to send questions after the session • < peterwolken@global.t-bird.edu >