1. Valuation: What Is My Company Really Worth? Satellite Broadcast - January 18, 2001

2. Valuation: What’s My Company Really Worth? Marcia Hooper, Advent International John Jarve, Menlo Ventures Alex Laats, Informio Inc. T.L. Stebbins, Adams Harkness & Hill Moderator: Joe Hadzima, Main Street Partners MIT ENTERPRISE FORUM, INC. ®

3. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION What’s My Company Really Worth? ANSWER: ANSWER: At Any Given Time Your Company Is Worth What Someone Will Pay For It At That Time

4. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners WHAT DETERMINES WHAT SOMEONE WILL PAY? SUPPLY SUPPLY DEMAND DEMAND WHEN WHEN MARKET LIQUIDITY MARKET LIQUIDITY METRICS FOR VALUATION METRICS FOR VALUATION

5. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - Macro Drivers Which Way Is The Tide Going? Which Way Is The Tide Going? – A Rising Tide Lifts All Boats – But, A Falling Tide Strands Them Overall State of the Economy Overall State of the Economy – e.g. Purchasing Cycles: Will Customers Purchase Today? Condition of Public Equity Markets Condition of Public Equity Markets – Time to IPO – Acquisition Paid by High P/E Stock

6. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - Macro Drivers Funding Cycles of Venture Capital Investors Funding Cycles of Venture Capital Investors – Allocation of Funds By Pension Funds and Institutions How Do They Determine How Much To Allocate To Alternative Investments Such as Venture Capital? How Do They Determine How Much To Allocate To Alternative Investments Such as Venture Capital? How Much Venture Capital Is Available Today? How Much Venture Capital Is Available Today?

7. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners Money Continues to Flow Into Venture Capital Funds New $$$ Into Funds (in Billions) (in Billions) Average $ Per Fund (in Millions) Source: National Venture Capital Association Number of Funds 252 391 366

8. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - Macro Drivers Funding Cycles of Venture Capital Investors Funding Cycles of Venture Capital Investors – How Much Venture Capital Is Available? – What Sectors Is It Invested In? “Anything.Com” last year at this time “Anything.Com” last year at this time Optical Networking or Genomics today? Optical Networking or Genomics today? – What Stage of Business Is It Invested In? e.g. during the LBO craze, early stage venture capital was scarce e.g. during the LBO craze, early stage venture capital was scarce

9. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners Venture Capital Investment Returns Seed Stage Returns Are Up Substantially Source: Venture Economics Jan 2000

10. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - Macro Drivers Capital Sector A Sector B Sector A Sector B Sector A Sector B HighLow Returns High Low Returns

11. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - MICRO Drivers For Any Given For Any Given Macro Environment Given Sector Given Stage of Business What Determines Valuation? What Determines Valuation? A Variety of Factors, including... – The TEAM and Experience – The Business Model and Its Sustainability – Evidence of a Business- Will the Dog Eat The Dogfood? – Momentum or Lack Thereof

12. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners VALUATION - POSITIONING & NEGOTIATION? How Much of Valuation Is “Simply” How Much of Valuation Is “Simply” – Positioning? You Are Known By The Company You Keep You Are Known By The Company You Keep – Customers, Partners, Advisors – Negotiation Skill? Having or Appearing to Have Alternatives Having or Appearing to Have Alternatives Getting A Bidding War Going? Getting A Bidding War Going? The Train Is Leaving The Station The Train Is Leaving The Station

13. MIT Enterprise Forum, Inc. ® Satellite Broadcast January 18, 2001 Joe Hadzima, Main Street Partners What’s Your Company Really Worth? SUMMARY OF VALUATION DRIVERS SUMMARY OF VALUATION DRIVERS Macro Conditions and Trends Macro Conditions and Trends – The Economy – The Public Equity Markets – Funding Cycles and Relative Returns Company Specific Factors Company Specific Factors – The Valuation “Story” Positioning and Negotiating Skills? Positioning and Negotiating Skills?