2008 D&O2008 D&O SymposiumSymposium

New York City ~ February 6 & 7, 2008

Life Cycle(s) of an IPO Life Cycle(s) of an IPO CompanyCompany

Life Cycle of an Life Cycle of an IPO Company IPO Company

• MODERATOR: Megan Colwell, Senior Vice President

Woodruff-Sawyer & Co.• Matthew Deneen, RPLU, Senior Vice President

Hooghuis Group, LLC• Deirdre Finn, Senior Vice President

Navigators Pro• Lauri Floresca, Senior Managing Director

Carpenter Moore, a NASDAQ Company• Keith Thomas, Executive Vice President

Zurich Management Solutions Group• Michael Torpey, Partner

Orrick, Herrington & Sutcliffe LLP

Case Study Case Study YellowWire, Inc.YellowWire, Inc.

• Headquarters: Santa Clara, CA

• Founded: 2001

• Market segment: Telecom

• Revenue: $8.5M as of YE05

• Management team: founders

• Funding: $15M via Rounds A & B

• Company valuation: $25M

Reverse Merger History Reverse Merger History and Perceptionsand Perceptions

• Historical View: Checkered past in the 70’s, 80’s and 90’s with “Pump and Dump schemes”.

Mergers-R-Us.com http://www.mergers-r-us.com/index.html

GoPublicUSA.comhttp://www.gopublicusa.com/main.html

“Take your private company public the easy way by purchasing a dormant, public shell company through a process known as a reverse merger...”

Successful Reverse Successful Reverse MergersMergers

• Texas Instruments Inc. • Berkshire Hathaway Inc. • Tandy Corporation (Radio Shack

Corporation) • Occidental Petroleum Corporation • Blockbuster Entertainment • The New York Stock Exchange• Frederick’s of Hollywood (1/28/08)

Reverse Mergers:Reverse Mergers:How Popular Are They?How Popular Are They?

Annual growth trends: 2003 2004 2005 2006

46 168 179 206

Q107: 53 RM’s/$3B Mkt cap = +100% growth

• University of Pittsburgh study: 91% of the companies that performed a RM

are still in existence three years later.

““Formerly Shady Reverse Formerly Shady Reverse Mergers Gain Credibility”Mergers Gain Credibility”

USA TODAYUSA TODAY, 6/28/07, 6/28/07

(1) New SEC rules in past five years

(2) IPO option: larger/more established companies (Post Dotcom/IPO Bubble)

2006: more reverse mergers than IPO’s

(3) SPAC’s (Special Purpose Acquisition Companies)

SPAC’s:SPAC’s:How Popular Are They?*How Popular Are They?*

• 2007: 65 SPAC’s went public = $11.7B• Average deal size: $183M (vs. IPO’s @ $229M) • Pipeline momentum

December 2007: 50% of new filings were SPAC’s January 2008: 7 of 13 new filings were SPAC’s

• Currently: 75 SPAC’s seeking acquisition/reverse merger

opportunities Flush with cash!

*Data from: Renaissance Capital’s SPAC Facts, Annual Review, January 2008

SPAC Statistics*SPAC Statistics*

  2003 2004 2005 2006 2007

No. of SPAC’s 1 12 28 34 65

Total Proceeds $24.2M $491.1M $2.1B $3.2B $11.7B

% IPO Market 1.5% 5.6% 14.4% 14.8% 23%

Avg SPAC Size $24.15M $40.9M $75M $95M $183M

Avg IPO Size $224M $198M $175M $217M $229M

*Data from: Renaissance Capital’s SPAC Facts, Annual Review, January 2008

““Traditional” Reverse Traditional” Reverse Merger—Shell CompanyMerger—Shell Company

• Reverse merger option

Faster, better, cheaper?

No real capital infusion; limited liquidity

PIPE financing = funding option