HarbourVest Partners Private Equity Market Overview HarbourVest CONFIDENTIAL 1 Private equity overview Multi-billion dollar asset class offering the potential for superior long-term returns through investments in private companies* Institutional investor participation since the 1970s Returns generated through a sale or IPO Includes venture capital, buyout, mezzanine, and distressed debt funds – Venture capital: Equity investments in start-up, early stage, and growth companies – Buyouts: Equity investments in established companies which include debt in their capital structures – Mezzanine: Investments in debt securities often with equity kickers, typically in mature companies – Distressed debt: Investments in debt securities of troubled companies HarbourVest CONFIDENTIAL 2 Investor allocation to private equity Average Private Equity Allocation by Investor Type (% of AUM) 35% Avg. Current Allocation 31.7% Avg. Long-Term Target Allocation 30% 28.0% 25% 20% 15% 12.9%13.0% 11.6%11.9% 10% 7.3% 6.5% 6.4% 6.2% 5.7% 6.3% 5% 2.7% 3.3% 0% Family Offices Endowments Foundations Superannuations Public Pensions Private Pensions Insurance Companies * Source: Preqin Investor Intelligence 2014 HarbourVest CONFIDENTIAL 3 Reasons investors utilize alternative investments % of Respondents Diversification 90% Volatility Management / Lack of Correlation 64% Alpha Generation 45% Long-term Growth Potential of Alternatives 45% Relationship with Inflation 30% Other 5% 0% 20% 40% 60% 80% 100% Source: Russell Investment’s 2012 Global Survey on Alternative Investing HarbourVest CONFIDENTIAL 4 Why invest in private equity? Long-term historical performance exceeds public markets Upper quartile funds significantly outperform the private equity index and public markets Accessing high quality managers is key to long-term success in private equity Dow Jones S&P 500 U.S. Private Equity U.S. Private Equity - Upper Quartile Funds 60% 55.7% 50% 40% 31.0% 28.6% 30.3% 30% 16.1% 15.7% 20% 12.9%14.1% 13.3%14.5% 12.4% 14.4% 10.6% 8.6% 8.7% 8.1% 9.1% 8.7% 10% 7.1% 6.4% 0% FTSE 100 European Private Equity European Private Equity - Upper Quartile Funds 50% 39.7% 40% 35.5% 31.9% 30% 25.0% 21.2% 20.2% 20.4% 20% 14.6% 11.7% 14.1% 12.1% 14.1% 7.6% 10% 5.7% 6.8% 0% 1 Year 5 Year 10 Year 15 Year 20 Year As of March 31, 2015 Source: Cambridge Associates through ThomsonOne. The U.S. or European Private Equity return is a pooled IRR based on the combined cash flows of all private equity funds in the benchmark The Private Equity-Upper Quartile Funds return is a pooled IRR based on the combined cash flows for the private equity funds in the benchmark that achieved upper quartile performance. Public market comparison also provided by ThomsonOne based on a methodology of buying and selling the index with the same timing of cash flows as the All Private Equity return. The securities comprising the public market benchmarks have substantially different characteristics than the private equity benchmarks, and the comparison is provided for illustrative purposes only. Investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that future private equity investments will achieve similar results. Global Market Perspective HarbourVest CONFIDENTIAL 6 Global private equity market – Summary Continued macro-economic tailwinds in a number of regions, albeit environment more uncertain with recent equity market shocks 2015 fundraising pipeline remains strong Intense competition for GP allocations, especially in the mid-market Investment activity expected to modestly improve, but pricing discipline essential Debt markets continue to be receptive to new deal activity Recent growth and innovation in private credit, particularly in Europe Liquidity environment favourable, although IPOs could be more challenging in 2H 2015 HarbourVest CONFIDENTIAL 7 Investment pace remains modest 887 $800 $600 581 390 $400 381 $ Billions $ 353 317 294 262 273 200 $200 138 $0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H '15 U.S. Buyout U.S. Venture Europe Asia EM Source: Thomson Reuters, Incisive Media, and HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting HarbourVest CONFIDENTIAL 8 GPs treading carefully in high price environment Global Buyout EV / EBITDA Multiples Avg. Entry EV / EBITDA 11.0x 2014 1H 2015 U.S. 9.7x 10.3x Europe 10.0x 9.9x 10.0x Asia Pacific 8.7x 9.0x 8.0x 7.0x 6.0x 5.0x ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 U.S. Buyout European Buyout Asia Pacific Source: S&P Capital IQ Q2 2015, HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting HarbourVest CONFIDENTIAL 9 2014 – Record year for exits +27% $600 573 500 $400 363 367 349 325 283 $ Billions $ 271 214 195 $200 137 $0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 14 1H '15 U.S. Buyout U.S. Venture Europe Buyout Asia Source: Thomson Reuters, Mergermarket, Incisive Media, and HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting HarbourVest CONFIDENTIAL 10 Exits and strong equity markets driving fundraising recovery Global Private Equity Funds Raised 314 $300 270 248 194 212 $200 179 153 153 $ Billions $ 123 $100 77 81 $0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H '15 U.S. Buyout U.S. Venture Europe Asia EM Source: Thomson Reuters, Incisive Media, and HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting U.S. Market Overview HarbourVest CONFIDENTIAL 12 Stages of U.S. private equity VENTURE BUYOUT MEZZANINE DISTRESSED DEBT DEBT GROWTH/ SEED EARLY EXPANSION REVENUES None Limited Growing Yes Yes Yes PROFITS Loss Breakeven Yes Yes Yes No FUTURE CAPITAL High Moderate Low Low to Low Low to REQUIREMENTS Medium Medium RISK OF LOSS Highest Moderate Lower Moderate Low Moderate EXPECTED TIME 7+ Years 4-8 Years 2-5 Years 2-5 Years 4-8 Years 4-8 Years TO LIQUIDITY RETURN Very High High High Moderate to Moderate Moderate POTENTIAL High HarbourVest CONFIDENTIAL 13 Buyout investment activity remains consistent Disclosed Transaction Value Despite strong financing markets, GPs # of Deals with Disclosed Value remain selective 434 – Asset prices remain high, supported by public valuations and $300 225 debt markets # of#Deals – Gap between seller and buyer $200 150 expectations $ Billions$ $100 75 – Environment more conducive to selling than buying $0 0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H ’15 2014 volume was concentrated in middle 1H 2015 Transaction Size market with no deals above $5 billion – GP reluctance to participate in By Value By Count club deals 2% 6% – High priced public market comps Greater than $5B 15% 16% 28% – Strategic competition $1B-$5B 20% With the PetSmart deal closing in March, $250M-$999M 64% 2015 has seen a return of the greater 50% than $5 billion deal. However, based on Less Than $250M count, greater than 60% of transactions in 1H2015 remain less than $250 million Source: S&P Capital IQ Leveraged Commentary & Data and S&P Capital IQ, Closed deals only HarbourVest CONFIDENTIAL 14 U.S. buyout pricing remains elevated Purchase Price Multiple of EBITDA* Elevated pricing levels driven by 11.0x Run up of public market comparables 10.3 10.0x Availability of cheap credit 9.6 Competition from strategic and financial acquirers 9.0x Increase in sources of non-traditional capital (including co-invest) driving demand for 8.0x 7.8 deals higher 7.0x Market leading companies with reliable cash flow and strong management teams commanding premium multiples 6.0x Traditional buyouts are being underwritten to low-teens returns 5.0x ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H ’15 Outperformance found in high growth, “storied”, and EV <$250M EV $250-500M EV >$500M transformational transactions Source: S&P Capital IQ Leveraged Commentary & Data * HarbourVest estimates for EV<$250M in 2009, 2012, 2013, 2014, 1Q15 and for EV $250-$500M in 2009 HarbourVest CONFIDENTIAL 15 U.S. credit issuance near all-time highs U.S. High Yield and Leveraged Loan Volume $700 Investor demand for yield fueling near record issuance $600 $500 Record covenant-lite issuance providing $400 borrowers with “cheap and benign” debt creating forgiving capital structures $ Billions $ $300 $200 Low interest rates give borrowers ample $100 payment coverage $0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H 1H ’15 impacted by Fed regulation and Leveraged Loans High Yield Bonds '15 energy dislocation Credit Statistics Typical Leverage Levels 7.0x <$50M of >$50M of >$100M of EBITDA EBITDA EBITDA 6.0x Debt / 5.0x 4.0x-6.0x+ 5.0x-6.5x+ 6.0x-7.0x EBITDA 4.0x Equity % 3.0x 40%+ 30%+ 25%+ 2.0x 1.0x ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H Debt / EBITDA EBITDA / Cash Interest ’15 Sponsored loan volume includes leveraged buyouts, acquisitions, refinancings, and recaps Source: Credit Suisse (High yield data); S&P Capital IQ Leveraged Commentary & Data (Leveraged loan data) HarbourVest CONFIDENTIAL 16 U.S. buyouts – Shaping up to be another strong year of liquidity IPO Offer Amount The strong public markets of the last two years # of IPOs have supported robust buyout-backed IPO volume $60 100 – 2014 IPO volume nearly doubled 2013 record +73% $45 75 level – With 29 IPOs in the first half, 2015 is lagging $30 50 the record setting pace of 2014, however $ Billions $ activity did increase in the second quarter $15 25 of#IPOs $0 0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H '15 Public Market Sales Secondary share sales continue to generate $50 meaningful liquidity for investors $40 – Mega buyout deals drive volume $30 – 2015 is on pace to exceed 2014 volume with $29 billion of share sales in the first half $20 $ Billions $ $10 $0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 1H '15 Source: IPOs from Thomson Reuters include all companies with at least one U.S.