In 2009, the healthcare and technology sectors saw significant mergers and acquisitions as well as initial public offerings. Large companies made major acquisitions to expand into new areas, bringing new players into the industry. Some companies pursuing high growth also had successful IPOs despite the difficult market conditions. Analytics emerged as a hot sector relevant across the healthcare continuum. Remote patient monitoring and population health management showed promise but still had many unanswered questions. Cloud computing, mobile platforms, and data analytics were areas poised to transform healthcare IT and improve outcomes.

1. Acuity2010 Annual Synopsis & Outlook
HEALTHCARE & TECHNOLOGY.
ALL RIGHTS RESERVED. NO PART OF THIS PUBLICATION MAY BE REPRODUCED OR UTILIZED IN ANY FORM OR BY ANY MEANS,
ELECTRONICALLY OR MECHANICALLY WITHOUT PRIOR PERMISSION IN WRITING FROM THE PUBLISHER.
COPYRIGHT © 2010 TRIPLE TREE, LLC. A MERCHANT & INVESTMENT BANK.

2. UNCOMMON CLARITY.

3. Se N T I MeNT
“I know it’ll [the economy] get better. We’ve been “If changing a paradigm were easy, we’d already have
through all kinds of economic problems in this country universal healthcare and electric cars would’ve been INDEX
for a couple hundred years. Our genius in the United a hit. But changing a paradigm is hard: You have to
States is not in avoiding problems, it’s in overcoming scrape one idea out of the minds of millions of people VIEWPOINT 4
problems. We’ve overcome every problem we’ve ever and replace it with your idea – and you have only the
QUESTIONS 5
faced...Three of four years from now everything will existing tools to do that with.”
be fine.” – Dennis Pombriant, Founder, Beagle Research Group
ADVICE 6
www.destinationCRM.com, November, 2009
– Warren Buffet, Founder, Berkshire Hathaway
Quoted from a speech delivered at the Fortune Most Powerful Women Conference,
September 2009 RESEARCH 7
PERSPECTIVES 8
“IBM is a company that is notable for going the other “Making medicine smarter is more than a marketing
direction…IBM’s footprint is more narrow today than message. It is delivering today on the commitment ENGAGEMENTS 12
it was when I started. I am not sure that has been to to clinical excellence, improved patient outcomes and
the long-term benefit of their shareholders.” lower healthcare costs that comes from our significant CAPITAL MARKETS 14
– Steve Ballmer, CEO, Microsoft investments in innovation and execution across our
NYTimes.com, September 2009 M&A MARKETS 16
entire organization.”
– Kenny Klepper, President & CEO, Medco
PRIVATE EQUITY 18
http://www.medcohealth.com/medco/corporate/home, November 2009
VENTURE CAPITAL 19
“…a $300 netbook is a commodity…institutions get “Today it’s so complicated that the average
ABOUT TRIPLE TREE 20
trapped in the past…because of their cultural resistance [healthcare] consumer—and this is what the
to change” academics say—you can’t put the average consumer
– Sam Palmisano, CEO, IBM (response to Mr. Ballmer’s comment) in charge, it’s too complicated. Yeah it’s too
http://bits.blogs.nytimes.com, October 2, 2009 complicated! So let’s make it not complicated.”
– Jonathan Bush, CEO, athenahealth
Wall Street Journal, December 2009

4. VIe WPO I N T
Many companies and their investors have now rationalized what The result is that we are now positioned among the most relevant
transpired in 2009. healthcare advisors in the industry.
A harbinger of economic vitality – the stock market – bottomed We hope our annual issue of Acuity2010 provides useful
out in late 2008, recovered slightly, and fell even further in March perspectives on the current market landscape and we look forward
of 2009. Since then it has seen a terrific rally, one we hope is to reconnecting with you soon.
sustainable.
Sincerely,
Despite U.S unemployment remaining historically high, many
pockets of the economy are recovering and TripleTree is optimistic
about 2010. As such, we are advising and helping businesses with Kevin Green, Founding Managing Director
specialized solutions, disruptive delivery models, and predictable David Henderson, Founding Managing Director
growth to recognize the best paths for liquidity.
Peter Erickson, Managing Director
In industries like healthcare, traditional players are facing stiff
Chris Hoffmann, Director
economic and regulatory pressures, consumers are becoming
Brian Klemenhagen, Director
exceedingly influential, and long-standing problems are being
Tad O’Donnell, Managing Director
addressed with meaningful innovations – an environment ripe for
platform investment. Joe Schiesl, Managing Director
Ryan Stewart, Director
With an increasingly global reach, TripleTree continues to focus its Scott Tudor, Managing Director
attention on personal, weekly interactions with the best emerging Rob McCray, CEO – Wireless-Life Sciences Alliance
firms, financial sponsors, and strategic buyers. Entering our 12th
year, we are hiring talent, investigating new sectors, and enjoying
the competitive advantage of being an independent advisor and
principal investor.
4

5. QU eSTIO N S
TripleTree’s ecosystem consists of three interrelated groups: Middle Market Firms, Financial Sponsors, and Global Buyers. Each is seeking either
new pockets of growth, new capital sources, or new strategic partners while facing a range of questions:
• Is capital funding for growth or shareholder liquidity even available given current market conditions?
• As scrutiny grows around M&A and investment, what perspectives are critical in assessing timing and approach?
• How would an “IPO path” influence near-term decision making?
• What are the right strategies for addressing the opportunities arising as physicians and healthcare service providers take advantage of
the American Recovery and Reinvestment Act (ARRA)?
• What impact will healthcare reform and an expansionist attitude in Washington have on the industry, specifically the areas of
population health management, consumer directed healthcare, medical device innovation, and elder care?
• As alternative care emerges, where are telehealth, remote patient monitoring, and alternative care delivery models headed?
• Who are the players from outside the healthcare sector most poised to make an impact on the quality of care, compliance, and
patient experience management?
• One research group1 estimates that 64% of physicians in the U.S. use smartphones…will these become a defacto mobile
platform?
• How will cloud computing impact my company? My partners? My sector?
• How motivated are CFOs to move beyond reacting to business risk (financial, information, business) and becoming more proactive?
• How have the key factors that influence M&A valuations changed as a result of the current recession?
• If true, how will the rules for mobile media and content distribution be impacted?
1 Source: Manhattan Institute, 2009. 5

6. A dV I Ce
Preserving cash and hunkering down should not be a universal strategy for growth businesses. As the marketplace filters dozens of variables impacting
sales, operations, and executive thinking, we are telling CEOs and investors to remain opportunistic. We also believe that in a number of sectors non-
traditional leaders will come forward.
• Prepare for Overtures: Many of the better innovators are already • Consider New Business Models: Realize that the influence of
being approached by potential acquirers. For firms with On Demand or consumerism will create growth opportunities for solutions ranging
Software as a Service (SaaS) delivery, this (recurring) revenue interest from healthcare and financial applications, to enterprise logistics and
stems from a need for subscription-based and multi-tenant delivery education.
models.
• Understand your Market Landscape: Visualizing new opportunities and • Stakeholders are not Aligned: Increasingly, our team is working with
building an innovative roadmap are critical. One example is the web business builders and their shareholders to align expectations on
and mobile convergence of media and content and scrutiny about how relative “value”. A range of factors to support these expectations are
ad-driven revenue models can sustain long-term growth. critical and include both qualitative and quantitative metrics.
• Rationalize your Assets and IP: Having an appreciation for how your • Fixate on Performance Metrics: Emerging businesses should pick
business will be viewed as a strategic asset given today’s market five key performance metrics (TripleTree applies 40 when advising its
will impact timing and approach for M&A and capital formation. clients) and manage them with a real-time dashboard. These may
Some of the best business models we are seeing are “assemblers” include Monthly Recurring Revenue (MRR), Cash Flow and Customer
and “hybrids”. Said differently, these are firms identifying specific Churn...the best companies we see are maniacal about performance
marketplace pain points and addressing them with solutions comprised metrics.
of disparate pieces rather than suites. These are firms that represent
a new approach to brand building.
• Watch for Cloud Formations: At global firms, the best thinking we
• Think Beyond Financial Synergies: Well articulated long-term thinking, are witnessing seems to coincide with the organization’s willingness
a focus on new markets, identification of strategic partners, and an to rewrite their rules on sales and distribution channels, improve their
understanding of disruptive delivery models are critical components to connections with online constituents, and leverage cloud computing to
strategic discussions. improve customer support.
• Build an Acquisition Roadmap: Any notion of “high growth” will be • Know that Acquisitions will not be Limited to Global Firms. High flying
nearly impossible without a roadmap and embracing new delivery mid-market players with strong fundamentals will become acquisitive,
models like SaaS. Industry specialized solutions will be critical for targeting businesses with disruptive delivery models, recurring revenue
accelerating revenues and remaining relevant. streams, or industry vertical specialization.
6

7. Re Se A R Ch Theme-based assessments and opinions on sectors where
market dynamics are impacting growing and profitable businesses.
This report marks
TripleTree’s first analysis
This report examines This report examines the of the life sciences
IT GOVERNANCE
alternative delivery models rapid change of enterprise industry, identifying
Expanding the Role of IT Compliance
the sector’s unfolding
and Risk Management.
and new approaches to collaboration and social
RESEARCH R E P O RT | 2009
health management shifting software solutions. evolution in areas like
the paradigm for patient- patient safety, compliance,
centric care. sales and marketing, and
collaboration.
This report assesses how This report explores how This report focuses on the
IT GOVERNANCE
the evolution of mobile Cloud computing will Expanding the Role of IT Compliance
evolution of IT Governance
platforms and social tools modernize healthcare IT,
and Risk Management.
and the effects of
are legitimizing the growth help bend the cost curve, disruptive technologies,
RESEARCH REPORT | 2009
of mHealth. and improve patient regulatory trends, and
outcomes. market consolidation.
7

8. heALTh C A Re P eR S P eC T I Ve S – LOOKING BACK AT 2 0 0 9
A year ago a deepening recession and many legislative unknowns forced a wait-and-see mentality. While the jury is still out on any real economic boost
from the American Recovery and Reinvestment Act (ARRA) many companies looked to new markets and M&A for growth.
TripleTree’s decade of experience in Healthcare buoyed our brand and has us positioned for leadership in 2010.
L A R G E- C A P D E A L S IPOs CLINICAL SYSTEMS
Some significant deals bring new players Lofty public equity valuations led to Patient safety, compliance, decision support
and keeps the industry on its toes select IPO activity and interoperability rise
• Dell acquires Perot • Verisk IPO – creation of Verisk Health • Microsoft acquires Sentillion
• IMS Health taken private • Emdeon • Hospira acquires TheraDoc
• WellPoint sells PBM NextRx to Express Scripts • Accretive (filed) • Salesforce.com invests in Practice Fusion
• WebMD and HLTH merge • HealthPort files; later delays due to market • AMICAS taken private
conditions • Quadramed taken private
• Medidata Solutions
R E V E N U E C YC L E M A N AG E M E N T POPUL ATION HEALTH MANAGEMENT / ANALY TICS
Significant investments from the WIRELESS HEALTH A hot sector that is relevant in all areas
payer community Still more questions than answers of the healthcare continuum
• Ingenix acquires CareMedic • Cerner acquires IMC Health Care • Verisk acquires D2Hawkeye and TIERMED
• WellPoint invests in Availity • CVS Caremark invests in Generation Health • athenahealth acquires Anodyne Health
• CareFirst invests in NASCO • Inverness acquires Free & Clear • IBM – announces enterprise wide health
• JMI invests in Navicure • Proctor & Gamble acquires MDVIP analytics initiative and opened a Health
• GE and Intel form $250M Healthcare Alliance Analytics Solutions Center
• GE acquires remaining stake of Living
Independently Group
8

9. he ALTh C A Re P eR S PeC T I VeS – AR eAS TO WATC h
HE A L T H I N F O R M AT I O N EXC H A N G E – REMOTE PATIENT MONITORING (RPM) –
As providers, payers, employers, and pharma streamline workflows While Medicare has yet to implement a broad-based reimbursement
through enterprise applications, “information silos” are being removed framework for remote patient monitoring, we view RPM as a key lever
through mandated information standards forcing the adoption of in chronic care management for seniors, in particular, and the broader
middleware and maturing degrees of interoperability across platforms and chronic condition population.
industry constituents.
HEALTHCARE C OMPLIANCE –
DATA AN A LY T I C S A N D I N T E L L I G E N C E – Compliance mandates in healthcare are wide-ranging and encompass
All constituents across healthcare are seeing increased focus on the regulatory medical necessity, payment integrity, consumer-driven medical
adoption of data analytics and business intelligence to drive higher /pharmaceutical care adherence, and patient privacy.
degrees of visibility across the cost, care, and quality continuum.
SPOTLIGHT REPORT
CLINICAL AUDITING –
IT- D R I V E N C A R E MA N AG E M E N T – Driven from NCQA’s HEDIS requirements and the MMA’s risk adjustment
The marriage of health analytics, workflow-based care management
of Medicare Advantage premiums, a new sub-sector has emerged around
systems, and interactive telecommunication solutions are enabling
the clinical auditing of medical chart-based data that is delivering deeper
payers to think more aggressively about care coordination and care
levels of patient insights across the cost, care and quality continuum;
management.
with highly relevant applications in the Phase IV post approval drug safety
HE A L T H I N S U R A N C E E XC H A N G E – and efficacy efforts across the biopharma industry.
As legislation seeks to make coverage more easily attainable through the
A LTERNATIVE CARE D ELIVERY MODELS –
creation of exchanges, payers will need to create more robust direct to
Models of care that leverage technology and take place outside of the
consumer capabilities and enhance automation capabilities to create more
walls of physicians’ offices and hospitals, e.g. telehealth, retail clinics,
efficient “click-to-card” processes.
virtual visits, and email.
W I R E L E SS A N D M O B I L E HE A L T H – PHARMA / L IFE SCIENCES -
The use of wireless technology across the entire healthcare system seeks
Big pharma companies will transition from a manufacturer/supplier role
to cut system costs, increase efficiency, and improve outcomes through
to a partner for payers and providers in an attempt to enhance care
the real-time seamless flow of mission-critical data to and from once
management and outcomes.
disparate systems.
9

10. T eCh NO LO G Y Pe R S PeC T I Ve S – LOOKING BACK AT 2 0 0 9
For Acuity2010, TripleTree considered broad market news and events impacting the sectors and industries where we provide investment banking support.
For 2009, mega-trends driven by cloud computing, consumerism, collaboration, and mobile might be viewed as “transformative” and despite the running
joke that “flat is the new up,” meaningful deals occurred across many sectors, providing continued buoyancy to consolidation trends.
IPOs
B I G & G E T T I N G BIGGER
The IPO market is beginning to thaw as
A new set of master brands are emerging
10+ technology IPOs were completed in 2009
• Oracle acquires Sun
• Dell acquires Perot • Open Table
• Emerson acquires Avocent • SolarWinds
• HP acquires 3com • LogMeIn
• IBM acquires SPSS • Rosetta Stone
• Xerox acquires ACS
• Adobe acquires Omniture
C LO UD MOBILE
Leveraging virtualization to create more Platforms emerge to support
efficient and cost effective solutions communication and collaboration
• Cisco acquires Tandberg • Silver Lake acquired by Skype
• VMware acquires SpringSource • Google acquires AdMob
• Sun acquires Q-Layer • Cisco acquires Starent Networks
• RightNow acquires HiveLive • Visto acquires Good Technologies
• Oracle acquires Virtual Irons
10

11. T eCh NO LO G Y Pe R S PeC T I Ve S – AR eAS TO WATC h
DE L I V E RY M O D E L S VERTICALS
• SaaS – OnDemand continues to mature and SaaS 3.0 is now relevant, • Education – A growing reliance on technology in the classroom and
extending applications into platforms. virtual/distance learning will drive strong market growth and investor
interest.
• Cloud – Focus will shift from “discussion to evaluation” and to
demonstrable examples where IT resources are more effectively • Public Sector – Government IT spending is increasing and large market
leveraged across projects and delivered in a more scalable and cost opportunities exist in healthcare, pubic safety, and cyber security at
effective fashion. federal and state levels.
• Mobile & Wireless – Enterprises will continue to advance their wireless • Financial Services – Rebounding markets, increased consolidation,
strategies as consumerism influences wireless adoption; wireless retail, and stronger regulatory compliance requirements will drive technology
micropayments and high growth industries. investment.
D OMAINS
• Collaboration – People, processes, and data will become more interactive
and supported by web architectures and standards.
• Compliance – Enterprises are taking a holistic view of increased
regulation and are looking for automated, repeatable and auditable
processes.
• Data Analytics and Business Intelligence – Data continues to be a
competitive asset and real-time analytics and decision support systems
will emerge as processing power increases.
11

12. eNGAGeMeNTS Our deal flow entering 2010 is the strongest in the history of the firm.
IMC Health Care, an operator of on-site healthcare centers at employer sites was acquired by Cerner, a leader in
healthcare technology.
ABOUT IMC HEALTH CARE:
• An innovator in the field of on-site healthcare, IMC has differentiated itself through its ability to create
customized health centers to match each client’s unique culture and specific needs.
• More than 20 years of providing occupational health services to a wide range of employers.
CareMedic, a provider of enabling technologies and services that optimize revenue cycle efficiency and improve
cash flow, margins and productivity to hospitals, was acquired by Ingenix, a subsidiary of United Health Group
and a leading health information, technology and consulting company.
ABOUT CAREMEDIC:
• Enterprise platform of SaaS-based software and business process outsourcing services for the provider
revenue cycle.
• Only Company with a true end-to-end data and process integration engine built upon a patient centric
data model, the Company’s Electronic Financial Record (eFR®) platform.
Anodyne Health Partners, a provider of revenue cycle business intelligence (BI) solutions to mid-market and
enterprise medical group practices, was acquired by athenahealth (Nasdaq: ATHN), a leading provider of SaaS-
based business services to physician practices.
ABOUT ANODYNE HEALTH PARTNERS:
• Anodyne Health provides a proprietary web-based BI software platform that enhances an organization’s
ability to view and access all facets of its revenue cycle information.
• Anodyne fills a significant void in the provider RCM competitive landscape by unlocking the “self-service”
model for RCM analysis with a BI solution that is easy-to-use and designed specifically for the unique
“pain points” of the provider community.
• Anodyne services mid-market and enterprise medical group clients and has over 14,000 providers under
contract.
12

13. Axentis, a global leader of governance, risk and compliance (GRC) management solutions was acquired by
Wolters Kluwer’s (AMS:WKL, WLSNc.AS) Tax and Accounting division, a leading provider of tax, accounting,
audit, risk, and compliance software solutions and services.
ABOUT AXENTIS:
• Pure-play SaaS GRC leader with 600,000 users in more than 100 countries.
• Blue chip customer base includes life sciences, healthcare, financial services, energy, utilities, and
Risk-driven compliance. On demand.™
manufacturing.
• Industry recognized leader by Forrester Research and Gartner for top-tier GRC solutions.
Infocrossing’s Secure Message Management Division, a provider of email message management, security
compliance, storage, archiving and eDiscovery was acquired by Marsys (Mariner Systems).
ABOUT INFOCROSSING’S SECURE MESSAGE MANAGEMENT DIVISION:
• Provides archiving, compliance, eDiscovery, secure messaging and filtering solutions including
visual policy management, intelligent content analysis and integrated search and long-term storage
management.
Security & Compliance
Division • 1,700+ SMB and enterprise customers worldwide.
HxTechnologies, a health information exchange (HIE) technology company enabling more effective care
through access to information, was acquired by MEDecision, a subsidiary of Health Care Service Corporation
(HCSC).
ABOUT HXTECHNOLOGIES:
• Provides healthcare providers and payers real-time, web-based access to a patient’s full set of diagnostic
images, reports, and other health information typically scattered out of reach across multiple healthcare
facilities.
• Proprietary technology allows providers to view and manipulate high-tech diagnostic images over the web.
• Fully IHE (Integrating the Healthcare Enterprise) compliant technology allows interoperability across
systems.
Oceanwide Logistics Business, a leading provider of web-based software solutions for international supply chain
logistics and import/export customs compliance, was acquired by Descartes DSGX (Nasdaq); DSG (TSX), a
provider of on-demand logistics technology solutions.
ABOUT OCEANWIDE LOGISTICS BUSINESS:
• Collaborative web-based platform for managing complex and time sensitive international freight logistics,
LOGISTICS BUSINESS
transportation management, and regulatory trade compliance.
• Over 1,000 clients worldwide, including Fortune 500 companies, carriers, freight forwarders, customs
brokers, and third-party logistics (3PLs) providers. 13

14. CAPITAL M A R KeTS ( FO C U S O N U. S. )
The second half of 2009 was marked by the uncertainty of healthcare I P O MA R K E T:
reform, rising unemployment rates, and the possibility of another large
government bailout. However, as the year came to a close the capital In 2008 countless S-1 filings were pulled and only two venture-backed
markets began to rebound and the healthcare reform picture became technology public offerings were completed. However, in 2009 over
clearer. Market indicators continue to be mixed. The DJIA is up over 60 IPOs were issued, most of them occurring in the second half of
15% Y/Y but the unemployment rate is still above 10%. While housing the year. IPOs again have become a viable liquidity option for “best-
prices in many markets across the country are beginning to recover, in-class” vendors with strong financial statements and an ability to
the threat of a commercial real estate crisis lingers as small businesses differentiate themselves.
struggle and large enterprises continue to cut costs.
P R E M I U M SE PA R AT I O N:
During a downturn, high quality companies tend to quickly
separate themselves from competitors. Vertical and delivery model
differentiation is critical to supporting this separation.
In addition, SaaS, mobile and cloud delivery models can improve
the scalability, accessibility, and overall cost effectiveness of most
application, information, and content-rich solutions. Consequently,
leading SaaS vendors such as Salesforce.com, athenahealth, and
OpenTable have been rewarded in the public markets and as of January
15, 2010 are trading at over 7.5 enterprise value to revenue EV/R.
Looking back on the year, 2009 will be remembered as a turbulent
period. The chart and table to the right highlights notable financial
news and events from 2009.
14

15. S&P 500 Index
150
140 13
130
9 10 11 12 14
120
Relative Percentage
110 6 7 8
1 2 5
100
3
90 4
80
70
60
50
Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09
1 Jan 09- Barack Obama is sworn in as the 44th President of 8 Jun 09- IPO market begins to thaw; SolarWinds, LogMein,
the United States. Open Table and Rosetta Stone complete IPOs in Q2.
2 Feb 09- Financial Stability Plan announced by U.S. 9 Oct 09- The U.S. dollar reaches $1.50/EUR for the first time
Treasury. since August 8, 2008.
3 Feb 09- President Obama signs American Recovery and 10 Oct 09- Dow Jones Industrial Index closes above 10,000.
Reinvestment Act of 2009.
11 Nov 09- CIT Group, Inc. files for bankruptcy protection.
4 Mar 09- S&P 500 reaches a low of $676.53, the lowest
closing price since September 12, 1996. 12 Dec 09- Gold tops $1,200 per ounce after spending three
months above $1,000 per ounce.
5 May 09- The Federal Reserve releases the results of the
Supervisory Capital Assessment Program’s “stress test” 13 Dec 09- Bank of America, Citigroup, and Wells Fargo announce
finding 10 of the 19 largest banks have inadequate capital plans to repay TARP ahead of year-end bonus compensation
reserves. payouts.
6 Jun 09- General Motors files for bankruptcy protection. 14 Dec 09- Patient Protection and Affordable Care Act was passed
by the U.S. Senate and House.
7 Jun 09- Ten banks are allowed to exit the government’s
Troubled Asset Relief Program (TARP).
15

16. M&A MA R Ke TS
In 2009, overall M&A spending and deal volume declined for the second consecutive year. Since the recession began in 2007, overall M&A
spending and deal volume has fallen nearly 55% Y/Y and 20% Y/Y, respectively. This is not surprising, considering that many businesses are
retrenching and shifting their focus back to core competencies. The chart below shows M&A deal volume over the past six (6) years.
6,000
□ $250M-$750M
□ $50M-$250M
5,000
□ <$50M
4,000
# of Deals
3,000
2,000
1,000
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2004 2005 2006 2007 2008 2009
16

17. As shown below, technology sector M&A spending and deal volume (including Deal Size: In 2009, a number of technology mega-mergers occurred (see
mega-merger deals) was down over 10% Y/Y and 20% Y/Y respectively. page 10). The number of $1B+ technology deals increased by 50% Y/Y but
Healthcare sector M&A spending and deal volume was down over 60% Y/Y and the number of mega-mergers was still far below the historic highs of 2007,
10% Y/Y respectively. The sharp decline in healthcare-related M&A spending due largely to concerns about market conditions. Meanwhile the number
was the result of fewer mega-mergers. However, mid-market healthcare M&A of healthcare sector deals exceeding $1B in enterprise value dropped over
spending was down only ~15% Y/Y, outperforming the overall market. 40% leading to a sharp decline in the aggregated value of healthcare M&A
transactions.
General M&A: Global buyers and buyout investors will be “opportunistic” in 2010
with the majority of M&A activity likely consisting of tuck-under acquisitions of Deal Structure: With the failure of New York-based financing behemoth CIT
complementary solutions. Some more aggressive acquisitions of “platform” Group in November, and the lack of available debt financing, valuations will be
companies or sector leaders may also occur. more conservative. Private equity acquirers will closely consider profitability,
cash flow visibility, and sector-specific parameters. Global acquirers with strong
Shifting Market Consolidators: In 2009, the mid-market led much of the M&A balance sheets and cash positions are expected to become more aggressive.
activity as vendors moved to acquire weakened competitors and fill portfolio
whitespace. In 2010, mid-market M&A activity will continue, but large vendors No Parallel Processes for Sellers: The IPO market is recovering but is still not the
will also move to build out and fill their own gaps. best path for liquidity for most companies. We see M&A discussions taking on a
hardened focus for M&A without the distraction of public market liquidity.
Technology M&A (2005-2009)* Healthcare M&A (2005-2009)*
# of Deals # of Deals # of Deals $ Billions
# of Deals $ Billions
Deal Size Deal Size
2,500 $200 1,200 $160
$180 $140
1,000
2,000 $160
$120
$140
800
1,500 $120 $100
$100 600 $80
1,000 $80 $60
$60 400
$40
500 $40
200
$20 $20
0 $0 0 $0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: CapitalIQ.
*Includes North America transactions only. Healthcare metrics excludes Pharma. 17

18. PRIVAT e eQ U I T Y
The aggregated published deal value and number of private equity (PE) Over-Leveraged Portfolio Companies and Leverage-Intensive Strategies
technology and healthcare investments recovered in 2009. TripleTree has will be Problematic: PE portfolio companies may begin to strain under
identified a few trends that shape our 2010 private equity outlook. their existing covenants and pending debt maturities. Additionally, PE
firms relying on high levels of leverage to fund deals and generate returns
Balance of Power Shifts from General Partners to Limited Partners:
will find that lenders have decreased their tolerance for risk, at least for
Investment terms will be less favorable to GPs as compared to past years.
the foreseeable future.
LPs will insist on greater accountability, better alignment of interests, and
more stringent reporting requirements. IPO Exit Window is Open but will Remain Limited: Only companies with
strong growth, sustainable profitability, modest leverage, and approaching
Fund Raising Dynamics Favor Long, Successful Track Records and Vertical
$100M-$200M in revenue will successfully enter the public markets. The
Specialization: Overall, PE firms planning to raise funds in 2010 will
recovery of the U.S. financial markets, although strong since the March
likely face significant headwinds. However, firms with a focus on vertical
’09 lows, remains shaky and additional market uncertainty could again
specialization, or with a clear “platform” roadmap and strategy, will find
close the IPO window.
high quality deal flow.
Technology PE Investments (2005-2009)* Healthcare PE Investments (2005-2009)*
# of Deals # of Deals $ Billions # of Deals # of Deals $ Billions
Deal Size Deal Size
200 $4.0 80 $1.5
180 $3.5 70
160
$3.0 60
140 $1.0
$2.5 50
120
100 $2.0 40
80 $1.5 30
$0.5
60
$1.0 20
40
20 $0.5 10
0 $0.0 0 $0.0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Source: CapitalIQ.
*Includes North America transactions only. Healthcare metrics excludes Pharma.
18

19. V eNTU R e C A P I TA L
As funds and their limited partners reevaluated their portfolios and the capital lost in other investments has lost viability in the current
made investments based on more selective criteria, the aggregated marketplace.
value of venture capital investments decreased by nearly 40%. While
Vertical Differentiation is Key: Companies that specialize in healthcare,
many VC-backed firms were squeezed and had to retrench to survive,
education, the public sector and other verticals will continue to receive
many SaaS, mobile, collaborative and cloud businesses showed
more venture capital than general IT solutions and services providers.
more growth as CIOs sought cost-effective technology approaches to
Investors are looking for companies that address specific pain points
business needs.
within mission critical workflows.
Selective Investing and Portfolio Trimming Will Continue:
Trend Investing: Early stage interest persists in green-tech / clean-tech,
Given limited liquidity options, TripleTree expects venture firms to guide
healthcare IT, education and areas enabling IT optimization and cost
the “winners” in their portfolios to successful exits through M&A, and
management, like cloud computing and mobile.
to shed underperformers through asset sales. The old model where the
success of one or two winning portfolio companies would offset
Technology VC Investments (2005-2009)* Healthcare VC Investments (2005-2009)*
# of Deals # of Deals $ Billions # of Deals # of Deals $ Billions
Deal Size Deal Size
2,000 $15 800 $9
1,600
600 2009 saw a
$10 $6 larger number of
1,200 smaller venture
400 capital investment
800 rounds.
$5 $3
200
400
0 $0 0 $0
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Source: CapitalIQ.
*Includes North America transactions only. Healthcare metrics excludes Pharma.
19

20. ABOUT TRIPLe TRee INSIGhTFUL. eXPeRIeNCed. INdePeNdeNT. 7601 France Avenue South
Suite 150
Minneapolis, MN 55435
952-253-5300
TripleTree’s merchant and investment banking practice is focused on opportunities where
disruptive technologies and innovative business models have converged or where vertical
www.triple-tree.com
industry specialization is a differentiator.
Today, our 200 years of aggregate expertise in healthcare has brought us to the forefront
of the industry as a leading strategic advisor.
We remain dedicated to providing cross-border clients with independent, candid
perspectives based on proprietary research.
Our principals are former business builders, advisors, entrepreneurs, and analysts who
take pride in their extensive network of personal and professional relationships. Since
1997, we have closed over $5B in sell-side M&A and $1.5B in recapitalization transactions
on three continents.
After you have considered the perspectives offered in Acuity2010, let us know if we can
accelerate your success through our unique brand of advisory services.
U N C O M M O N C L A R I T Y.
20

21. a - c u - i - ty (noun)
S hA R P Ne S S ; AC U T e Ne S S; Ke e N Ne S S:
AC U I T Y O F V I S I O N; AC U I T Y O F M I Nd.
MINNeAPOLIS | BOSTON | SAN dIeGO | www.triple-tree.com