Some Thoughts on Buying & Selling Research Companies

1. Some Thoughts on Buying & Selling Research Companies Perspective on Mergers & Acquisitions October 21, 2011 Terry Kent

2. Agenda Disclaimer Perspective on Mergers and Acquisitions in a Recession economy More consolidation - fewer buyers What Are Buyers Looking For? With syndicated products Without syndicated products How Should Sellers Prepare? Terry Kent

3. Perspective on Mergers and Acquisitions in a Recession economy More consolidation - fewer buyers Digital crowds the field Luck is a factor: right time – right place: who you know It is as hard to buy a $5 million company as it is to buy a $50 million company Why buy a company worth less than $10 million? Early stage with high growth potential Strategic “fill-in-the-gap” products or services Synergies make the financial model attractive They have a new product with a Patent that is defensible They have a talent pool with unique skill sets Cash is king but data is great Terry Kent

4. Research companies with syndicated products Sustainability of methods that are the foundation of the products New products Synergies with other products and services Potential for international expansion Unique IP Quality of staff Technical leadership Depth of staff Will they stay? Succession planning Quality of management Realistic financial histories (ups and downs) and forecasts based on realistic and stated assumptions What Are Buyers Looking For? Terry Kent

5. What Are Buyers Looking For? Research companies without syndicated products (custom/pseudo-custom) Depth of clients with ongoing repeatable research programs (tracking awareness, share, ROI) Vertical expertise Quality staff with teams assigned to each client with depth team Versatility in expertise so they can adjust to a fragmenting, consumer behavior, media and social environment Versatility in expertise so they can adjust to a fragmenting number of methods: Are they using new methods that can define what they measure and have some value to clients? How many competitors over the new method? How easy is it to replicate? Can they expand in home and foreign markets? Is the service “syndicatable”? Can it be productized? Terry Kent

6. What Are Buyers Looking For? Research companies without syndicated products Depth of management Overall Rainmakers How many and what they are good at selling? Do they have a mix of ages so that succession is clear? How are they compensated? Can the buyer retain? Methodologists and statisticians - math expertise Operations technical back room Who are they hiring? Number of “journeymen” How are key staff members compensated? Terry Kent

7. Questions Between a Buyer and a Seller Why do you want to sell or merge? Are you looking for just investment, or a strategic partner/buyer? Who is the decision maker? What is the ‘process’ and how long does it take? Do you have realistic valuation expectations? Are you prepared to consider an earn-out scenario to get your “number”? Are you prepared to be “absorbed” into a larger corporate culture? Are you willing to help the buyer retain staff? Is now a good time to sell? Do you need or should you get help and representation? Terry Kent

8. Market Research Council Gridley & Company LLCA Perspective on Market Research Trends October 21, 2011

9. Key Industry Issues • Definition of online panels evolving • Threat of real time analytics and customer interaction / feedback • Growing ability for brands to get direct consumer input and feedback Changing perception of market research industry

10. Key Value Drivers for Market Research Key Industry Themes Technology-Enabled “Infrastructure, scale, & data” Online “Global reach at a low cost” Mobile “Fish where the fish are” Social “Become part of the conversation”

11. Continual Shift to Online Channels The Continuing Rise of Online Research Offline Online Global Market Research • Online continues growth at the expense of telephone and face to face • Online research spending now at $7.5BN 24% of Total Market Source: ESOMAR.

12. Technology-Enabled • Technology underlies rapidly shifting business models in the Market Research industry • Internet • PC • Mobile, tablets Infrastructure • Able to reach & engage global audience • Low cost • Technology driven Scale Data • Rich data sets • Alternative data collection methodologies • Privacy concerns remain an issue

13. Social • With nearly 2 billion people speaking in social media, brands are seeking to become part of the conversation • Low cost market intelligence driven by thoughtful engagement Coca-Cola Starbucks Example of Coke using Facebook to elicit feedback on bottle design Example of Starbucks engaging customers to elicit information Keeping its audience engaged with point scoring system Massive audience

14. Today • Mobile phone market research works the same way as online research but uses the Internet browser • Questionnaires are delivered via an SMS or WAP message, automatically launches the survey on the mobile phone. • Questions are then answered, and the data is gathered in real-time • What’s Next • Opt-in Apps • Geo-specific engagement • Social networking integration • Game driven engagement Mobile • With 5.3 billion mobile subscribers, market research companies are find new and innovative ways to engage consumers in the go • Mobile will quickly overtake the PC as the most popular way to get on the Web • Industry is in the midst of developing best practices for deployment • Hit people with surveys any time – able to “measure the moment” • Wherever they are • Whatever they are doing • Always on • Primarily communication device • Rich surveys (MMS Video's / Photo's)

15. Public Companies in Market Research Traditional B2B Data Online Measurement Source: CapIQ.

16. Public Company Valuations Market Cap ($BN) B2B Data +99% Measurement +20% Stock Price Performance Traditional +11% Online -86% Source: CapIQ.

17. Select M&A Transactions Transaction Value ($MM) LTM Rev Multiple Date Acquirer / Target Commentary Traditional Market Research • Highly fragmented • Lots of “Moms & Pops” • Picky strategic buyers 07/27/11 $525.0 1.00x 03/17/10 $25.0 NA 01/09/08 NA NA B2B Data 03/08/10 • Typically vertically oriented • Higher value proposition and proprietary $643.2 1.29x 07/28/09 $5,071.9 2.34x 09/18/08 $196.3 NA 04/06/08 $223.0 NA

18. Select M&A Transactions (cont’d) Transaction Value ($MM) LTM Rev Multiple Date Acquirer / Target Commentary Online Market Research • High valuations and M&A activity in the mid 90’s • Healthy level of activity this year 09/07/11 NA NA 06/02/11 NA NA 02/14/11 $237.7 2.02x 02/07/11 $100.0 1.54x 10/06/09 NA NA 10/23/09 $121.8 1.64x 06/26/09 NM NM OTX 01/28/09 $84.4 1.41x 10/07/08 NA NA 08/06/08 $421.5 3.06x

19. Select M&A Transactions (cont’d) Transaction Value ($MM) LTM Rev Multiple Date Acquirer / Target Commentary Data Driven / Measurement • Consistent value proposition • Many successful outcomes • Broad universe of buyers 01/14/11 NA NA 05/28/08 $43.7 4.41x 03/03/08 $75.0 5.03x 07/09/07 NA NA 06/27/07 NA NA 04/19/07 $240.0 6.00x

20. Advice to the Audience • Traditional Market Research • Challenging market dynamics given exploding online channels • Many players thinking through consolidation and exit opportunities • B2B Data • Vertical focus and proprietary approach drives value • Subscription oriented businesses get premiums • Online Market Research • Use of new technologies and techniques drives values • Measurement • Data and data analytics drives value • Historically has achieved premium valuation to broader sector • Exit timing doesn’t matter

21. Linda Gridley, President & CEO Gridley & Company LLC 10 East 53rd Street, 24th Floor New York, NY 10022 212.400.9720 tel 212.400.9717 fax Twitter: @gridleyco www.gridleyco.com