Capital Formation Plan

1

Understanding Private Equity Markets

State of Private Equity Markets

Truly Excellent Companies

Typical Growth Companies

Weaker (Limited) Growth Companies

Open Access

Closed Access

Normal Private Equity Conditions (1994 – 1997, 2004)

All truly excellent companies and some typical growth companies

2

State of Private Equity Markets Weak Capital Market Conditions

(2000 – 2003, 2005-2007)

Only the “best of the best” in favored industries and they face tougher terms

Open Access

Closed Access

Truly Excellent Companies

Typical Growth Companies

Weaker (Limited) Growth Companies

State of Private Equity Markets Abnormally Exuberant Market Conditions

(1998 - 2000)

All excellent and typical, and some weaker companies in a “gold rush” mentality.

Open Access

Closed Access

Truly Excellent Companies

Typical Growth Companies

Weaker (Limited) Growth Companies

3

Summary

• Private equity markets follow the conditions of the public markets

• When the bar is raised, fewer companies get financed

• In 2000 (height of the dot.com bubble), VC investments topped $100 billion

• In the last decade, markedly lower and consistent – $20 to $30 billion per year