1. Soup to Nuts Seminar Series
May 19, 2001

2. Thomas Weisel Partners is the Leading Investment Bank
Presenter: Brian Kasser, Principal, Software Investment Banking Practice
Founded in Q by Thom Weisel, former CEO of Montgomery Securities for 27 years, and officially opened doors for business February 1999
Capital raised: : $16B : $28B
$ in M&A advisory transactions: 1999: $ 7B : $ 76B
Annual revenue: : $186MM : $492MM
810 employees at 5/19/01
Offices in San Francisco, Menlo Park, New York, Boston and London
Focused exclusively on investment themes transforming the economy & targeting the high quality growth companies
Merchant banking approach combining research, underwriting, M&A advisory and private equity investment activities
Combines deep domain expertise with bulge bracket execution capabilities
Thomas Weisel Partners is the Leading Investment Bank
Exclusively Focused on Emerging Growth

3. Table of Contents IPO Process Overview IPO Market Overview
Overview of Thomas Weisel Partners

4. IPO Process Overview

5. IPO Process Overview Select the Team
Draft a Document / Conduct Due Diligence (Bankers & Research)
File Registration Statement with the SEC
Marketing (Roadshow)
Pricing / Trading

6. Characteristics of Companies that are Ready for an IPO
Today Institutional Investors are evaluating potential technology IPOs
based on the following metrics / attributes:
Quarterly revenue run rate greater than $10 million and attractive sequential growth
Visibility (2 quarters out)
Profitability (≤ 2 quarters after filing)
Market position (first mover advantage – market leaders)
Stable customers (Global 1000)
Solution sold at sizable average selling prices (“ASP”)
Proven business model
Strong strategic channel partners
Reasonable mix between license / service revenue
Reasonable mix between direct / indirect sales channels
Strong board representation
Well-recognized investors
Management (seasoned / experienced)

7. Identifying and Selecting Investment Banks for an IPO
Full-Service Investment Bank
Strong Research Capability with Domain Expertise and “Active” Approach Names (Publishing) Dialogue with both Sales Force and Institutions
Focused and Active Sales and Trading within the Company’s Sector
Experienced Investment Banking Professionals with Sector Wide Knowledge and Advisory Capabilities
Reputation and Strength of Firm
“Fit” and Comfort with the Firm

8. Landscape of the Leading Investment Banks (Unbiased)
Strong
Execution
Limited
Emerging Growth
Focus
Broad/
Diluted
Goldman Sachs
Morgan Stanley
Merrill Lynch
CS First Boston DLJ
Salomon Smith Barney
First Union
SG Cowen
Deutsche Bank Alex. Brown
Banc of America
Fleet Robertson
J.P. Morgan Chase
Piper Jaffray
Wit Soundview
RBC DRW
UBS
William Blair

9. Timing, Participants and Tasks of the IPO Process
Drafting / Due Diligence
SEC Review Period
Marketing / (Roadshow)
Pricing
After Market Support
Time Frame
Key Participants
Core Tasks

10. Proceeds of the Offering
Gross Proceeds: The total offering size. Shares Offered * Expected Price
Gross Spread: The percentage of the gross proceeds paid to underwriters to cover management fees,selling commissions and underwriting concessions. Almost always 7% on IPO’s; less on follow-ons (usually negotiable)
Offering Expenses: Expenses of the offering borne by the company. Typically accounting and legal fees, filing fees and printing costs.
Net Proceeds: Gross Proceeds - Gross Spread - Offering Expenses
Example:
Gross Proceeds million shares issued X $10.00/share expected price $50.0 million
Less: Gross 7% --$10.00 X .07 = $0.70 X 5.0 million shares $ 3.5 million
Less: Offering Expenses ---$700, $ million
Equals: Net Proceeds $45.8 million

11. Mechanics of an IPO Valuation
Some Form of Public Comparable Company Analysis: Price-to-Revenue, Price-to- Earnings, Combined with a Discounted Cash Flow
Pricing an “Art” Not a “Science” (Within Accepted Metrics)
Aftermarket Demand and Performance
Majority of Shares Still Held by Founders and Existing Investors
Market Ultimately Prices the Deal Based Upon Demand Characteristics
Post Offering, Valuation Fluctuates Based on:
Operational Progress and Announcements
Meeting “Street” Expectations Quarter After Quarter
Research Coverage and Visibility
Trading Volume and Liquidity

12. Variables of an IPO Valuation
Trading Multiple: Based on comparable analysis, the multiple at which the investment banks believe a company will trade in the public markets.
IPO Discount: The amount by which the investment bank discount the trading multiple to calculate the IPO Multiple. Typically, IPOs are priced such that the stock price is expected to appreciate 15%.
IPO Multiple: The multiple at which a company is taken public Trading Multiple/ (1 + IPO Discount)
Post Money Equity Value: The equity value of the company at an assumed IPO price Post Deal Shares Outstanding * IPO Price
Pre-Money Equity Value: Post-Money Equity Value - Offering Size
Primary Shares: New Shares sold by the company
Secondary Shares: Existing Shares Sold by Insiders (Typically Not Applicable for an IPO)

13. Typical Stock Splits Prior to an IPO
Prior to going public, companies will usually effect a stock split or reverse stock split.
This is done to manipulate the price range of the common stock. To get it into a reasonable “filing range” (Typically low to mid teens)
A stock split does not change the company’s capitalization just the number of shares outstanding and consequently the earnings per share and per share price.

14. IPO Market Overview

15. Overview of the Current Economy
The slowing U.S. economy has resulted in a reduction of capital spending by enterprises, especially on IT equipment and software
The reduction in IT equipment and software spending has resulted in weak financial performance for technology companies and significant stock price declines
The combination of a slowing U.S. economy and significant valuation adjustments has all but dried up the IPO market for early-stage emerging growth companies
Investors have returned to historical less aggressive metrics to evaluate public technology companies and initial public offerings
Companies architected for the investor environment of 1999 and 2000 must be restructured
No more “top line growth at any cost” mentality
Earnings matter!!!

16. Return to Historical Valuations

17. Number of Transactions $ Amount Raised ($ in Billions)
IPO Market Overview
Monthly Initial Public Offerings: 1996 to Present
Number of Transactions
$ Amount Raised ($ in Billions)

18. Initial Public Offerings % Priced Below Filing Range
IPO Market Overview
Pricing Trends in IPOs
The Big IPO Party…...
Initial Public Offerings
……..And The Morning Hangover
% Priced Below Filing Range
% Priced Within Filing Range (a)
% Priced Above Filing Range

19. IPO Market Overview
After Market Performance of IPOs that priced in 2001, 2000, and 1999

20. Overview of Thomas Weisel Partners

21. Overview of Thomas Weisel Partners
Strategic Positioning
Focused exclusively on investment themes transforming the economy
Target selected growth industries and highest quality companies
Merchant banking approach combining traditional institutional brokerage with significant private equity investment activities
Comprehensive banking services for growth companies including equity underwriting, convertible debt, private placements, M&A advisory and private client services
Founded in Q4 1998, officially opened doors for business February 1999
810 employees, expected to increase to over 900 by end of 2001
$40.4 billion in equity capital raised
$85.7 billion in M&A advisory transaction volume announced/completed
Thom Weisel, CEO of Montgomery Securities for 27 years
At Montgomery, Thom and other founders supervised an organization that in the 1990s raised $100 billion in 988 equity offerings and executed 385 M&A transactions representing $100 billion in value
Other senior executives with 20+ years experience at Merrill Lynch, Credit Suisse First Boston, Salomon Smith Barney, Alex. Brown and others
San Francisco: Institutional Brokerage, Research, Corporate Finance, Private Client Dept. & Private Equity
New York: Research, Private Client Dept. & Corporate Finance
Boston: Institutional Brokerage & Corporate Finance
London: Institutional Brokerage & Corporate Finance
Business Momentum
Management Team
Global Reach
Thomas Weisel Partners is the Leading Investment Bank
Exclusively Focused on Emerging Growth

22. Overview of Thomas Weisel Partners
Thomas Weisel Partners Status Report
IPOs and Follow-ons Completed
156 transactions
$40.4 billion raised
18 lead managed offerings
IPOs and Follow-ons Pending
14 transactions filed/announced
$1.4 billion filed/announced
2 lead-managed offerings
Mergers and Acquisitions
68 transactions completed/announced
42 transactions in backlog
$85.5 billion in completed transactions
$178 million announced
Private Placements
25 transactions completed
15 transactions in process
$1.4 billion raised
Convertibles
8 transactions completed
$3.1 billion raised
Dollars ($mm)
As of April 9, 2001 IPOs and follow-ons completed include over-allotment and convertibles do not include over-allotment

23. Overview of Thomas Weisel Partners
Comprehensive Services Across the Entire Lifecycle of Today’s Emerging Growth Companies
Private
Public
M&A Advisory
Research, Sales & Trading
IPO
Capital Raisings
Stage of Development
Private Client Services
Private Placements
Late Stage Private Equity (TWCP)
Venture Capital (TWVP)
Company Life Span

24. Overview of Thomas Weisel Partners
Thomas Weisel Partners Equity Underwriting Expertise
Experience
20+ years experience in investment banking
Completed over 156 financings in Thomas Weisel Partners short history
Focused exclusively on emerging growth companies
Raised over $40 billion in equity financing since inception
Deep relationships with strategic and institutional investors
Understanding of the strategic investor landscape
Highly integrated with M&A and Equity Research teams
Experience in managing and completing IPOs and secondary offerings
18 lead managed offerings completed
Deliver size and valuation objectives for clients
Dedicated & Integrated Team
Track Record of Success

25. Overview of Thomas Weisel Partners
Thomas Weisel Partners Equity Expertise

26. Overview of Thomas Weisel Partners
Thomas Weisel Partners M&A Advisory Expertise
Experience
Average of 15 years experience in mergers and acquisitions advisory
Blend of bulge bracket, boutique and growth-oriented M&A experience
Led by two of the industry’s most respected M&A professionals
Mark Shafir -- former Head of Global Technology Investment Banking at Merrill Lynch
-- advised Cisco on more than 10 transactions
-- advised SDL on its $41 billion sale to JDS Uniphase
Bob Kitts former Managing Director in the M&A Group at Morgan Stanley
Deep understanding of the growth sector M&A landscape
Highly integrated with Investment Banking and Equity Research teams
Experience in managing and completing M&A transactions
68 transactions completed/announced
Dedicated & Integrated Team
Track Record of Success

27. M&A Environment & TWP Capabilities
Strategic US Advisory Rankings: 2001 YTD Ranked by Dollar Volume
M&A All Sectors
M&A Technology Sectors (1)
(1) Technology Includes SDC Tech Industries (e.g. Biotechnology, Computer Equipment, Communications, Electronics, Robotics, etc…
Transactions counted in the period in which they are announced. Excludes spinoffs, buybacks & withdrawn deals
Transactions with undisclosed values are included in the deal count but do not contribute to the Txn Value Total
Source: Securities Data Corp. 4/4/01 - Transaction Values are equivalent to SDC’s rank values.

28. Overview of Thomas Weisel Partners
Thomas Weisel Partners Private Placement Expertise
17 years experience in dedicated private equity effort
Completed over 100 financings at Montgomery Securities during the 1990s
Focus on a broad set of growth company industry groups
Raised over $3 billion in private equity in the 1990s
Private equity team focused solely on the private equity placement market
Deep relationships with private equity investors
Understanding of the strategic investor landscape
Highly integrated with Investment Banking, M&A and Equity Research teams
Experience in managing and completing private placements
Completion in 8 to 14 weeks
Deliver size and valuation objectives for clients
Realize liquidity objectives through public offering or sale within 24 months
Experience
Dedicated & Integrated Team
Track Record of Success

29. Overview of Thomas Weisel Partners
Thomas Weisel Partners Private Placement Transactions

30. Overview of Thomas Weisel Partners
Thomas Weisel Partners Private Placement Transactions

31. Overview of Thomas Weisel Partners
Thomas Weisel Partners Private Equity Funds

32. Overview of Thomas Weisel Partners
Thomas Weisel Capital Partners, L.P.
$1,311,503,386
Technology Services
Healthcare Technology
Media & Communications
Software & Internet Infrastructure
Over $700 million committed to 28 leading companies on the cutting edge of change in software and internet infrastructure, technology services, media & communications, communications equipment and healthcare technology.

33. Overview of Thomas Weisel Partners
Private Client Services
Thomas Weisel Partners Private Client Services strives to preserve the capital base of clients through wealth diversification and asset allocation
Management of cash flow and other short-term capital needs
Corporate Cash Management
Investment Management Consulting
Comprehensive asset allocation and diversification
Brokerage Services
Identification of tax efficient investment strategies
Tax & Estate Planning
Corporate Services
Brokerage services provided to “friends” of the deal; execution of restricted security transactions
Competitive execution and agent approach to fixed income