Industry Overview April 2012 Industry Overview April 2012 Mediabridge Senior Team

Industry Overview April 2012 Industry Overview April 2012 MediaBridge Senior Team

Our principals have advised on more than 30 mergers and acquisitions in the media sector worldwide, comprising an aggregate transaction value of over $1 billion. Led by Ethan Jacks and John Bowen, our team has 50+ years of experience in media technology with unmatched expertise in the film, video, audio, broadcast, Internet, and new media markets.

. Extensive investment banking, corporate executive and legal experience . Most recently drove Covington Associates’ expansion into the digital media and technology sectors . Avid Technology Senior Executive (EVP Corp Development/M&A,CLO, CFO) from ‘99 to ’06. Led the Company in its most significant period of growth. Managed 12 strategic acquisitions, doubling the Company’s revenue to $1B and growing market cap from $400M to $2.5B . 20+ years of experience in traditional and new media tech and 10+ years in venture capital and high tech . Corporate development, finance, and legal background; BS and MBA from MIT and its Sloan School of Ethan Jacks Management; J.D., Georgetown University Law Center

. Extensive investment banking, equity research and operational IT experience . Most recently led Covington Associates’ expansion into the digital media and technology sectors, representing both privately held and publicly traded companies . VP Equity Research at FAC Equities covering digital media technology, networking hardware and software, and enterprise software companies. Previously at Sybase, McDonnell Douglas, and Digital Equipment Corp. . Author of three significant industry research reports on media technology and CDN markets . 10+ years of experience in traditional and new media technology, and 20+ years of IT Industry experience . BS Mechanical Engineering, Digital Systems concentration from University of New Hampshire; John Bowen MBA from Babson College

2 Senior Advisors At NAB – CRX Partners

Courtney Spencer and Roland MacBeth serve the media technologies industries as strategic and business development consultants. Both have played key roles in the M&A efforts of media technology companies, held key executive positions with consumer electronics and pro audio/broadcast firms, and consulted for some of the best-known companies in the electronics business. CRX and MediaBridge work to provide the best combination of strategic and transaction expertise to the professional and consumer audio/video markets

. 30+ years of executive experience in professional, broadcast and commercial audio . Senior VP Business & Professional Group Americas (Allen & Heath, Calrec, D&M Pro), D&M Holdings . Full time consultant, D&M Holdings (M&A and post acquisition integration focus) . VP/GM, Professional Audio, Sony Broadcast & Professional

Courtney Spencer

. 30+ years of executive experience in consumer, pro, and commercial AV . Past and present consulting clients include: Gold Peak, Phoenix Gold, D&M Holdings, Mitek, Pioneer Electronics, Terk, Audiosource, KLH, DASH Navigation, XM Satellite Radio, Cerwin-Vega, Carver, Gibson . President - Phoenix Gold International . Senior Vice President of KLH Audio and Vice Chairman KLH Europe . Executive Director of Sales and Marketing - Cerwin-Vega Roland MacBeth

3 Senior Advisors At NAB – Broadcast and Film

. 25+ years executive management experience in the media industry . Current board member of Media Asset Capital, a full-service media consultancy, and AV3, a web distribution channel . Former President and CEO of xtranormal Inc. . Former EVP and GM of Avid’s Video division, a $470 million business with 1500 employees . Executive management positions with Post Impressions, Discreet Logic, and Dynatech

Graham Sharp

. 20+ years in the entertainment industry including award-winning work as an editor, producer, and director . Director of Digital Media and Technology at the University of Southern California’s School of Cinematic Arts . Worked on numerous feature films including the Academy Award winning Harlan County, U.S.A. (1976), Arthur (1981), and Visions of Light (1992) Meri Weingarten

4 Senior Advisors – New Media and Private Equity

. 25+ years experience in Technology, Media, Education, and Healthcare . Chief Marketing Officer at Health Dialog and QuantiaMD . 10 years advising Universities and diverse healthcare industry players . 15 years at Forrester Research in both Research and Marketing executive roles. . Graduated from Harvard University with a degree in Economics Mary Modahl

. Strategic advisor specializing in the evolution of the global IT market. . Co-founded or lead several technology companies as Chairman or CEO including Reva Systems (acquired by ODIN) and Xedia Corporation (acquired by Lucent). . Awarded “CEO of the Year” by Massachusetts Telecommunications Council . Served on the Board of Directors for many venture-backed startups and industry consorita . Graduate of Imperial College, London and an Associate of the Royal College of Science Ashley Stephenson

. Consultant in Private Equity and Hedge Fund industries . In-house lawyer at Plymouth Rock Assurance in Boston, MA focusing on corporate acquisitions and commercial real estate . Lawyer at Sidley & Austin, focusing on debt-derivatives and secured lending transactions. . Served on the Boards of a variety of nonprofits, providing strategic advice and guidance on fundraising and development, financial, and governance matters Jenny Young du Pont . A.B. from Princeton University and a J.D./M.S.F.S. magna cum laude from Georgetown University

5 Transactions

Transaction Closed During Employment with: * Covington Associates; ** Silverwood Partners; *** Avid Technology

6 Wohler Acquires RadiantGrid

. RadiantGrid was represented in the sale process by Ethan Jacks and John Bowen, principals at MediaBridge Capital Advisors, a digital media-focused investment bank. “We see this acquisition as a benchmark for the transformational change occurring in the broadcast and new media marketplace,” said Jacks. “Wohler and RadiantGrid together will help redefine the best practices for the industry.”

. Wohler President and CEO Carl Dempsey called the move “the most significant [for Wohler] in years. This has put the buzz back in it for us.” Calling RadiantGrid “the world’s best media transformation and integration platform,” Dempsey described the process that led to the acquisition and promised that while the combined organizations would function seamlessly, the RadiantGrid team would remain intact under the Wohler banner.

. Kirk Marple, RadiantGrid president and chief software architect, characterized the union as an ideal match. “We’ve been looking for the right partner to accelerate our growth, both internationally and domestically, and it really seemed like the right fit.” “A key component of the RadiantGrid media platform is its faster-than- real-time processing, recently expanded to include standards conversion — an industry first.”

7 NAB ‘12 Best of Show TV Technology Magazine

Company Award Winning Product Company Award Winning Product AJA Ki Pro Quad Orad TD Control Autodesk Smoke 2013 Panasonic BT-LH2170 LCD Production Monitor Avid Avid Interplay Sphere Pixelmetrix OTT Meat Grinder (OMG) Belden Belden 1776 Microphone Cable Quantel revolutionQ Blackmagic Design Blackmagic Cinema Camera RadiantGrid New Media Automation Platform Cameron Pace Group Shadow 5D Production Suite Redbyte MD-CROSS Design/Decimator Cobalt Digital LMNTS Ross Video Blackstorm Playout Server Canon Canon EOS Series Sachtler ACE Tripod System Chyron Engage Schneider Optics iPro Lens System Dalet Galaxy Sierra Video Aspen 3232 Routing Switcher Digital Broadcast Spot Commander Snell Momentum Ericsson AVP-3000 Sony NEX-FS700 NXCAM Evertz Dreamcatcher Telemetrics EPS Televator Haivision KulaByte 4.0 TV Logic LQM-471W Monitor Harmonic ChannelPort Utah Scientific UTAH-100/UDS Harris Magellan NMS Wheatstone Sideboard Rack Audio Mixer JVC GY-HM650 Mobile News Camera WideOrbit WO Master Control Microwave Video PortaQAM Microwave Wohler iON Remote Monitoring Platform Systems (MVS) Modulator/Demodulator Miranda iTX MC Xendata SX-10 Network Appliance Multidyne SilverBACK II Zylight F8 Fresnel

8 NAB ‘12 Best of Show Digital Video Magazine

Company Award Winning Product Company Award Winning Product 1 Beyond Wrangler LTO-5 NetDrive Fujinon PL 19-90 Carbio Adobe Creative Suite 6 GenArts Sapphire Edge Aframe Cloud Video Production Platform HP Z1 Workstation AJA Ki Pro Quad JVC GY-HMQ10 AJA T-Tap Libec SWIFT JIB50 ARRI L7-C Manfrotto Remote Controls for Canon HDSLRs Autodesk Smoke 2013 Nikon D800 Avid Media Composer 6 Oconnor O-Focus Dual Mini Blackmagic Blackmagic Cinema Camera Panasonic BT-LH1850 Blackmagic Teranex 2D and 3D Processors PRG TruColor TruColor HS Canon Cinema EOS Series RED Scarlet Carbon XL Carbon XL 10 Sachtler Ace Sachtler Ace Convergent Design Gemini RAW Sony NEX-FS700 Edelkrone FocusPLUS+ and FocusONE TVLogic LVM-074W Zylight F8 Fresnel

9 Video Markets Overview Video M&A 2012 Select Transactions Value EV / LTM Date Target Name ($MM) Revenue Acquirer Name Trident Microsystems, Set Jan-12 Top Box Business 65 - Entropic Communications, Inc. Jan-12 Telestream, Inc. - - Thoma Bravo, LLC Jan-12 Sezmi Corporation 52 KIT digital, Inc. Jan-12 Zeebox Limited (10%) - - British Sky Broadcasting Ltd Jan-12 Aspiro AB (73%) 32 - Schibsted ASA Jan-12 Dolphin Television Ltd. - - Sony Entertainment Television UK Feb-12 Roxio - - Corel Corporation Feb-12 VCON Video Conferencing 4.5 - ClearOne Communications Feb-12 IP Video Systems, Inc. - - Barco NV Feb-12 NetLogic Microsystems 3,700 8.4 x Broadcom Corp. Mar-12 Gennum Corporation 510 3.7 x Semtech Corp. Mar-12 Cotendo, Inc. 268 9.0 x* Akamai Technologies, Inc. Mar-12 NDS Group 5,022 5.0 x Cisco Systems SeaChange, Broadcast Server Mar-12 and Storage Business - - Vantage Point Capital Partners Apr-12 RadiantGrid Technologies - - Wohler Apr-12 Cambotics Inc - - Ross Video Pend. Hyro Australia 14 - Kit Digital Technicolor SA, Broadcast Pend. Services Division 37 * - Ericsson Pend. Radvision 163 * 2.1 x * Avaya

Source Capital IQ, Press Releases * Estimated Value

11 Video M&A 2011 Select Transactions - Q3-Q4

Value EV / LTM Date Target Name ($MM) Revenue Acquirer Name Jul-11 Rovi BD+ Technology 25 - Irdeto USA GDC Technology Limited Jul-11 (80%) 73 1.2 x The Carlyle Group Jul-11 Cloud.com, Inc. 164 - Citrix Systems, Inc. Jul-11 Kulabyte Corporation - - HaiVision Systems, Inc. Aug-11 Loquendo S.p.A. €53 - Nuance Communications, Inc. Oct-11 Autonomy Corp. plc 12,033 11.1 x Hewlett-Packard Company Sep-11 Iridas, Certain Assets - - Adobe Systems Inc. Sep-11 Panvidea, Inc. - - Thought Equity Motion, Inc. Oct-11 Qumu, Inc. 53 3.9 x Rimage Corp. Nov-11 BigBand Networks, Inc. 162 - Arris Group Inc. Nov-11 BNI Video 99 - Cisco Systems, Inc. Oct-11 MOSAID Technologies 590 5.6 x Sterling Partners Oct-11 PubliTronic B.V. - - Grass Valley, Inc. Oct-11 Skype 8,600 10 x Microsoft Corporation Nov-11 VideoSurf, Inc. 70 * 7.0 x * Microsoft Corporation Dec-11 SetJam, Inc. - - Motorola Mobility Holdings, Inc. Pend. Motorola Mobility 12,033 0.6 x Google Inc.

Source Capital IQ, Press Releases * Estimated Value

12 Video M&A 2011 Select Transactions - Q1-Q2

Value EV / LTM Date Target Name ($MM) Revenue Acquirer Name Jan-11 Kewego SA 32 3.0 x KIT digital, Inc. Jan-11 KickApps Corporation 45 - KIT digital, Inc. Jan-11 Kyte.tv 6 - KIT digital, Inc. Jan-11 Grass Valley 80 0.2 x Francisco Partners Mar-11 Inlet Technologies, Inc. 95 6.3 x Cisco Systems, Inc. Mar-11 The Foundry Visionmongers 100 5.0 x The Carlyle Group Mar-11 TXT Polymedia S.p.A. 34 1.6 x KIT digital, Inc. Mar-11 Accordent Technologies 50 5.6 x Polycom, Inc. Evolving Systems, Inc., Jun-11 Numbering Solutions Assets 46 3.2 x NeuStar, Inc. May-11 Stereo D - - Deluxe Entertainment Jun-11 SageTV - - Google Inc.

Source Capital IQ, Press Releases * Estimated Value

13 Growth Capital 2012 Select Video Transactions

$25m $45m $200m $20.5m

$10-20m

$0-10m

Source Capital IQ, Press Releases, Public Filings

14 Growth Capital 2011 $50m+ Select Video Transactions

$20-50m

$10-20m

$5-10m

$0-5m

Source Capital IQ, Press Releases, Public Filings

[est.] Four Trends to Watch Video 2012 1. Disruptive Technology Heightened: The conversion to standard IT solutions is nascent in its transition. As digital technologies enable performance, flexibility and cost efficiencies, cloud-based initiatives will go one step further, ranging from utility applications through full network-based solutions.

2. Multiplatform Consumption will Accelerate: Growth in mobile and web-based consumption cannot be under estimated. The iPad and other various OTT options are driving mass adoption of non-mainstream media consumption and certain forward thinking operators have embraced new consumption models. Generational behavioral shifts are accelerating change, with two screens becoming the norm. Addressing scale, device format and synchronization, demand variability and bandwidth availability are key.

3. Network Connected, File-Based Workflows are Critical: There is a growing need for efficient file-based creation and distribution of media that augment and integrate with existing systems (e.g., linear automation, trafficking, rights management, business process management). File-based systems will become more intelligent, orchestrate processes in parallel, and improve multiplatform workflow efficiency, while dramatically reducing costs.

4. Advertising: Ad dollar spending will shift to mirror consumer viewing habits, and context will be critical driven by analytics. Total online display ad spending in the U.S. are expected to double from 2011 to $27B in 2016, but its growth rate will slow once ad spending and consumer viewing habits near equilibrium. Video advertisements will experience the most robust growth annually of online display ads – estimated to rise to 35% of online ad spending to $9.3B in 2016 from 16% in 2011.

16 Survey of Publicly Traded Companies in the Media Marketplace

The following five slides profile a series of publicly traded media technology, distribution, and content companies. Many of the companies who are succeeding have addressed the message from Frost and Sullivan below.

“The digital content experience revolution is here to stay, and the level of fragmentation in both live and file-based content will get a lot worse before it starts to get better. Consumers are demanding access to their content anytime, anywhere and on any device – and service providers who do not consistently and innovatively meet the growing demands of ubiquitous video will fade and perish.”

- Frost and Sullivan Achieving Operational Freedom in Digital Media Workflows April, 2012

17 Publicly Traded Media Technology Companies Market Capitalization – Large Cap

Values In $MM Adobe Akamai Autodesk Cisco Ericsson Naspers Panasonic Sony

$7,077 $1,763 April $166 $372 2003 $92,312 $12,942 $26,882 $46,662

$21,016 $5,065 $8,863 $4,527 April 2006 $133,283 $69,429 $71,426 $67,100

$11,512 $7,547 April $3,389 $3,874 2009 $101,914 $33,904 $27,693 $26,358

$16,645 $9,197 $21,333 April $6,509 2012 $108,042 $31,621 $19,148 $18,954

Adobe Akamai Autodesk Cisco Ericsson Naspers Panasonic Sony Cash $2,766 $849 $1,411 $46,742 $12,096 $1,001 $8,800 $17,524 Debt $1,512 $0 $0 $16,904 $4,888 $2,305 $19,914 $13,490 Enterprise Value (EV) $15,391 $5,660 $7,785 $78,223 $24,734 $22,870 $31,051 $20,437

EV / Rev 3.64 x 4.89 x 3.51 x 1.74 x 0.74 x 5.05 x 0.20 x 0.16 x EBITDA Margin 34.8% 42.8% 20.8% 25.6% 14.4% 19.6% 5.4% 4.6%

Source Capital IQ

18 Publicly Traded Media Technology Companies Market Capitalization – Mid Cap

Values In $MM Dolby Evertz EVS Harman RealD Rovi Tivo Yamaha $66 $564 $303 April $1,876 $3,446 2003 $747 $1,138 $617 April $2,198 $7,295 $5,300 2006 $1,742 $946 $441 $708 April $3,935 $823 $2,372 2009 $3,227 $1,022 $682 $651 $1,381 April $4,072 $3,224 $1,917 2012

Dolby Evertz EVS Harman RealD Rovi Tivo Yamaha Cash $1,022 $191 $42 $770 $29 $420 $619 $661 Debt $0 $2 $2 $389 $25 $995 $173 $222 Enterprise Value (EV) $3,072 $834 $657 $2,843 $649 $3,802 $935 $1,515

EV / Rev 3.25 x 2.92 x 4.85 x 0.68 x 2.54 x 5.50 x 3.93 x 0.34 x EBITDA Margin 49.6% 33.1% 44.9% 8.9% 31.3% 34.3% -44.9% 5.6%

Source Capital IQ

19 Publicly Traded Media Technology Companies Market Capitalization – Small Cap

Value In $MM Avid Brightcove DTS Harmonic JVC Kit Digital Miranda SRS VIZRT $34 April $611 $207 2003 $439 $33 $87 April $1,831 $344 $472 $222 2006

$41 $115 $75 April $352 $398 $643 $406 $169 2009

$348 $283 $98 April $329 $486 $497 $577 $576 $280 2012

Avid Brightcove DTS Harmonic JVC Kit Digital Miranda SRS VIZRT Cash $33 $17 $86 $162 $745 $48 $31 $34 $72 Debt $0 $7 $0 $0 $1,136 $21 $0 $0 $0 Enterprise Value (EV) $296 $476 $411 $415 $974 $321 $252 $65 $205

EV / Rev 0.44 x 7.50 x 4.24 x 0.76 x 0.24 x 1.50 x 1.38 x 1.97 x 1.58 x EBITDA Margin 2.9% -22.1% 36.1% 10.3% 7.9% 13.7% 19.9% 5.3% 19.7%

Source Capital IQ

20 Publicly Traded Media Distribution Companies Market Capitalization

Values Charter Comcast Echostar Netflix Pandora Sirius Time Warner Verizon In $MM $434 $656 April $64,306 $48,913 $98,885 2003

$1,605 $7,040 April $55,833 $75,637 $99,688 2006

$1,367 $2,516 $1,330 April $39,434 $24,765 $88,665 2009

$6,137 $2,367 $5,778 $1,481 $8,562 April 2012 $80,012 $34,797 $106,474

Charter Comcast Echostar Netflix Pandora Sirius Time Warner Verizon Cash $2 $1,674 $1,696 $798 $91 $774 $3,476 $13,954 Debt $12,921 $39,309 $2,534 $434 $0 $3,014 $19,524 $55,152 Enterprise Value (EV) $19,056 $134,042 $3,214 $5,414 $1,391 $10,802 $50,842 $197,610

EV / Rev 2.65 x 2.40 x 1.16 x 1.69 x 5.07 x 3.58 x 1.75 x 1.78 x EBITDA Margin 36.6% 33.2% 18.1% 13.4% -0.2% 31.3% 24.1% 31.9%

Source Capital IQ

21 Publicly Traded Content Owner Companies Market Capitalization

Values In $MM CBS Discovery Lions Gate News Corp Scripps Viacom Walt Disney

$82 April $34,945 2003 $18,528 $28,351 $1,056 April $54,122 $53,717 2006 $11,115 $2,639 $6,971 $598 April $19,037 $3,868 $34,881 2009 $20,909 $19,483 $25,613 $1,751 April $47,454 $7,294 $75,548 2012

CBS Discovery Lions Gate News Corp Scripps Viacom Walt Disney Cash $660 $1,124 $53 $9,432 $760 $1,147 $3,766 Debt $5,982 $4,245 $948 $15,454 $1,384 $7,790 $14,386 Enterprise Value (EV) $26,231 $22,606 $2,646 $54,558 $8,336 $32,393 $88,334

EV / Rev 1.84 x 5.34 x 2.01 x 0.00 x 4.02 x 2.15 x 2.16 x EBITDA Margin 21.9% 44.1% 7.7% 19.7% 47.5% 27.2% 24.3%

Source Capital IQ

22 Audio Markets Overview Audio M&A 2012 Audio Growth Capital - 2012 Value Date Target Name ($MM) Acquirer Name Jan-12 PlayOn - EMI Music France S.A. Jan-12 AWAL UK Limited - Kobalt Music Group Ltd. $50m Feb-12 SoniVox - Numark R2M Music (Certain Mar-12 Assets) - BMG RIGHTS MANAGEMENT GmbH Mar-12 A-Line Acoustics - Atlas Sound LP Mar-12 Setlist.fm - Live Nation Entertainment $50m* Mar-12 Imagine Research - iZotope

$19.7m

Undisclosed

Source Capital IQ, Press Releases, Public Filings * Denotes announced

24 Audio M&A 2011 Q3-Q4 Select Transactions

Value Date Target Name ($MM) Acquirer Name Jul-11 MWM Acoustics, LLC $137 Harman International Industries Inc. Jul-11 Yellow Tools (Assets) - MAGIX AG Aug-11 Naim Audio Ltd. - Focal-JMlab S.A. (nka:Focal & Co.) Aug-11 Kungsbacka 57 AB $19 Skullcandy, Inc. Sep-11 Dynamic Hearing Pty $5 Wolfson Microelectronics Sep-11 Free Field Technologies - MSC Software Corporation Sep-11 Coffey Sound Trew Audio Workplace AV Systems Sep-11 Division - AVI Systems Nov-11 Loewe AG - LaCie SA Workplace AV Systems Dec-11 The Stanton Group - Gibson Guitar Corp. Dec-11 DiGiCo UK Limited $78 ISIS Equity Partners Dec-11 BigChampagne - Live Nation Entertainment Sony/ATV Music Publishing LLC; Mubadala Development Company; GSO Capital Partners LP; Anc EMI Music Publishing $2,200 Jynwel Capital Anc Beats Electronics (51%) $309 HTC America Anc FAB Enterprise $15 Wizzard Software Corporation

Kungsbacka 57

Source Capital IQ, Press Releases, Public Filings

25 Audio M&A 2011 Q1-Q2 Select Transactions

Value Date Target Name ($MM) Acquirer Name Jan-11 The Reamp company - Radial Engineering Ltd Feb-11 Informationsteknik - Shure Incorporated Feb-11 3dB Research $3 Harman International Feb-11 SAE Institute $293 Navitas Limited Feb-11 Pelika Business Music Oy $10 Mood Media Corporation Apr-11 Summit Audio Inc. - Blue Microphones, Inc. Apr-11 BlueHaze - XIX Entertainment Apr-11 Astro Gaming, Inc. $11 Skullcandy, Inc. Apr-11 Rockustics, Inc. - MSE Audio Group Apr-11 Nippon Record Center Co., - TL Logicom Co. Ltd. May-11 Native Instruments - Management Buyout Jun-11 DEI Holdings, Inc. $114 Charlesbank Capital Partners, LLC Jun-11 MySpace, Inc. $35 Specific Media, Inc. Shinwa International Jun-11 Holdings - JVC KENWOOD Holdings, Inc. Jun-11 Intelix - Liberty AV Solutions

Source Capital IQ, Press Releases, Public Filings

26 Audio Growth Capital 2011 IPO Select VC/PE Transactions

$50m+

$20-50m

$10-20m

$0-10m

Source Capital IQ, Press Releases, Public Filings

27 M&A Outlook Audio Industry

2011 was an extremely active year in M&A for the audio sector. Deal categories include consolidation, buyout, and strategic partnering. Our outlook is that 2012 will remain very active.

Many companies were founded in the 1950’s – 1970’s . The majority of MI and Pro Audio companies are closely held individual or family owned businesses. . Owners of more than 70% of these are at or nearing retirement age with a need to achieve liquidity or transition to new ownership. . The larger companies in the industry (e.g., Sony, Yamaha, Dolby, Harman, Apple, Avid, JVC) are well capitalized and acquisitions are their only way to produce strategic growth.

The digitization of many products creates the opportunity for product interoperation, integration, and combination . Digital signal processing is becoming ubiquitous in the audio signal chain, blurring the distinction between traditional product segments (EQ, Dynamics, FX, mixing, etc.) . To be competitive in the larger market, companies need to acquire technologies, branding, and experience to expand into adjacent and emerging market segments. . This product synergy could not exist in the analog world.

Given the impact of the recession, there is pent up demand for M&A . Strong demand exists on both the buy-side (primarily among strategic buyers) and sell-side (especially companies looking for a stronger platform or firms ready for transition). . Digital Media M&A activity is projected to shift from recovery to growth in 2012 as greater stability, large cash balances, and liquidity in the credit markets will aid strategic buyers seeking growth opportunities.

28 6 Trends to Watch Music and Audio 2012

1. Mobile & Apps: Mobile devices and applications, including the iPad, are now mainstream commercial goods. Companies are creating synergistic products for these platforms, which are long term, viable competition to the desktop studio. High-end markets like pro audio will continue to leverage new consumer technologies as they emerge and offer increasing power. Mobile apps are now used to generate up-sell opportunities for brand leaders.

2. Integration: Tighter integration of software and purpose-built hardware are already common, and examples continue to evolve. These include broadcast and live digital mixing consoles (Calrec, SSL, etc.), project studio products (PreSonus, SSL, Pro Tools HDX), DJ products (NI’s Maschine), and many others.

3. Diversification: The emergence of high growth companies offering a range of complementary hardware and software product lines, such as Presonus and iZotope.

4. SaaS & Cloud: Next generation of mobile will increasingly be hosted, cloud based applications. Licensing models will transition to subscription.

5. Recording: nearly exclusive focus on home/project studios. Continued fascination with vintage gear, including tube electronics (and plug-in emulations), early condenser microphones, etc. Trend towards boutique companies together with a small number of large manufacturers.

6. Social Media: VC funding increasingly requires a social media story; companies are creating products as a means to build a social network, especially for the consumer music industry.

29 World Markets

30 Global M&A 50,000

40,000 # of Deals Closed Without Transaction Info 30,000

# of Deals Closed with 20,000 Transaction Information

Total Transactions Per Year Per Transactions Total $3.6T 10,000 $2.24T $2.3T $2.5T Capital Invested $1.84T 45% 44% 44% 44% 43% 0 2007 2008 2009 2010 2011

1. Both Capital Invested and Completed Transactions are growing on a global scale. 2. Attributed, in part, to favorable economic conditions. 3. Of the Deals Closed with released Transaction Values: Deals with values between $0-$100m historically account for upwards of 80% of all deal flow, regardless of economic condition.

Source Capital IQ

31 Global PE/Growth Equity

6,000

5,000 # of Deals Closed Without 4,000 Transaction Info

3,000 # of Deals Closed with $311b Transaction Information 2,000 $256b $208b Capital Invested 1,000 $121b $149b 82% 81% 87% 86% 84% 0 2007 2008 2009 2010 2011 1. Completed Transactions have grown regardless of economic condition 2. Increasingly popular method of funding due to favorable returns. The number of PE funds are increasing as well as the size of funds.

Source Capital IQ

32 Global Venture Capital

7,000

6,000

5,000 # of Deals Closed 4,000 $102b Without Transaction Info $89b $83b $86b 3,000 # of Deals Closed with $65b Transaction Information 2,000 Capital Invested 1,000 76% 75% 78% 76% 76% 0 2007 2008 2009 2010 2011

1. Both Capital Invested and Completed Transactions have resumed growth on a global scale. 2. As early exit strategy options have decreased, VCs are investing larger sums in more funding rounds, to both protect their investments and benefit from a larger stake. 3. Of the Deals Closed with released Transaction Values: 1. ~70% of all deals are investments between $0-10m.

Source Capital IQ

33 Global Reach, Vertical Depth

Ethan E. Jacks John C. Bowen Managing Partner Managing Partner [email protected] [email protected] 617.592.2739 (m) 617.921.0075 (m)