1. Linkages between the Public & Private Markets Georgiana Fung Small Cap Strategist, MLPF&S 212-449-9189 · georgiana_fung@ml.com May 2007 Georgiana Fung Small Cap Strategist, MLPF&S 212-449-9189 · georgiana_fung@ml.com May 2007 Refer to important disclosures on slide 33. 1 1 Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2. Refer to important disclosures on slide 33. 2 Background  Public Market Structure  Relationship to Private Equity Private Equity Outlook  Investments  Exits Background  Public Market Structure  Relationship to Private Equity Private Equity Outlook  Investments  Exits Outline

3. Refer to important disclosures on slide 33. 3 BACKGROUND

4. Refer to important disclosures on slide 33. 4 For Every Large Cap, there are 10 Smaller Cap Names Source: Merrill Lynch Small Cap Research

5. Refer to important disclosures on slide 33. 5 The Linkages between the Public and Private Equity Markets Source: Merrill Lynch Small Cap Research

6. Refer to important disclosures on slide 33. 6 Similarities of Smaller Cap Stocks and Private Equity Characteristics of Smaller Cap stocks & Private Equity vs. Large Cap stocks  Less transparent  Less recognized  Less liquid  Faster growth Characteristics of Smaller Cap stocks & Private Equity vs. Large Cap stocks  Less transparent  Less recognized  Less liquid  Faster growth

7. Refer to important disclosures on slide 33. 7 Information Flow Reduces as Company Size Decreases Source: Merrill Lynch Small Cap Research, IBES

8. Refer to important disclosures on slide 33. 8 Managers of Less Liquid Assets are More Likely to Provide Value Added Source: Merrill Lynch Small Cap Research, Lipper

9. Refer to important disclosures on slide 33. 9 Smaller and Less Liquid Assets have Outperformed the S&P 500 Source: Merrill Lynch Small Cap Research, Venture Economics

10. Refer to important disclosures on slide 33. 10 PRIVATE EQUITY OUTLOOK

11. Refer to important disclosures on slide 33. 11 Private Equity Outlook Investments  Capital markets supportive of buyouts  Opportunities in smaller cap public equities Exits  IPOs expected to be healthy  M&A to remain a key driver Investments  Capital markets supportive of buyouts  Opportunities in smaller cap public equities Exits  IPOs expected to be healthy  M&A to remain a key driver

12. Refer to important disclosures on slide 33. 12 INVESTMENTS Capital markets supportive of buyouts

13. Refer to important disclosures on slide 33. 13 Fund Raising Has Gone from Strength to Strength Source: Merrill Lynch Small Cap Research, Venture Economics

14. Refer to important disclosures on slide 33. 14 Investors are Suspect over High Expectations among the Mega-50 Source: Merrill Lynch Small Cap Research, I/B/E/S

15. Refer to important disclosures on slide 33. 15 Anything but Large Source: Merrill Lynch Small Cap Research, Lipper, ML High Yield Strategy, Venture Economics (*) Bond issuance and PE data is Quarterly as of Q4/06.

16. Refer to important disclosures on slide 33. 16 Capital Markets to Facilitate Deal Making Source: Merrill Lynch Small Cap Research, Merrill Lynch High Yield Strategy

17. Refer to important disclosures on slide 33. 17 LBOs of Smaller Public Companies on the Rise Source: Merrill Lynch Small Cap Research, Securities Data Corp.

18. Refer to important disclosures on slide 33. 18 Relative Values are Not Extreme Source: Merrill Lynch Small Cap Research

19. Refer to important disclosures on slide 33. 19 Cost of Being Public Weighs on Smaller Companies Source: Merrill Lynch Small Cap Research

20. Refer to important disclosures on slide 33. 20 More Opportunities in Small Cap Stocks Source: Merrill Lynch Small Cap Research

21. Refer to important disclosures on slide 33. 21 EXITS IPOs likely to be healthy; M&A to remain the driver

22. Refer to important disclosures on slide 33. 22 IPOs Expected to be Healthy Risk taking to curtail appetites for IPOs in the near- term However, healthy markets, a lower cost of capital and rising issuance go hand in hand Risk taking to curtail appetites for IPOs in the near- term However, healthy markets, a lower cost of capital and rising issuance go hand in hand

23. Refer to important disclosures on slide 33. 23 Over 400 Companies were Sold by VCs in Each of the Past 3 Years, a Solid Figure Source: Merrill Lynch Small Cap Research, VentureOne

24. Refer to important disclosures on slide 33. 24 Risk Appetites Unwinding and will Continue Source: Merrill Lynch Small Cap Research, VentureOne

25. Refer to important disclosures on slide 33. 25 An Improving IPO Backdrop can Fuel a Spate of Additional Fund Raising Source: Merrill Lynch Small Cap Research

26. Refer to important disclosures on slide 33. 26 M&A a Key Driver Hunt for growth by larger firms through acquisition Especially true in Healthcare Hunt for growth by larger firms through acquisition Especially true in Healthcare

27. Refer to important disclosures on slide 33. 27 Healthcare Increasingly becoming a more Meaningful Part of the Consolidation Wave Source: Merrill Lynch Small Cap Research, Securities Data Corp.

28. Refer to important disclosures on slide 33. 28 Expectations for Large Pharma Continue to Grind Down Source: Merrill Lynch Small Cap Research, I/B/E/S

29. Refer to important disclosures on slide 33. 29 Micro Cap Healthcare Offers Higher Growth Source: Merrill Lynch Small Cap Research, I/B/E/S * Private Equity/Micro Cap Proxy

30. Refer to important disclosures on slide 33. 30 Smaller Biotech/Drug Sell Below Long-term Average Valuations Source: Merrill Lynch Small Cap Research

31. Refer to important disclosures on slide 33. 31 Large Cap Healthcare Companies are Hunting for Growth

32. Refer to important disclosures on slide 33. 32 Final Remarks Source: Merrill Lynch Small Cap Research PUBLIC PRIVATE

33. Refer to important disclosures on slide 33. 33 Disclaimers