Cashing Out Successfully: Exit Strategies to Capture Value

1. Cashing Out Successfully: Exit Strategies to Capture Value MIT Enterprise Forum Presented by James E. Nicholson Chairman & CEO Cortek, Inc. April 16 , 2001

2. Outline • Getting Ready • Exit Strategies • Evaluating a Company

3. Setting the Stage for the “Exit” Starts Early An Enabling Technology Management & Leadership Good counsel Financial Strength Technically Proven Product Having an Exit Strategy

4. What is an “enabling” technology? • Something that didn’t exist before that allows you to do something you couldn’t do. • It solves a difficult problem quickly and elegantly. • Unique product or service with a viable market. • Provides an opportunity for substantial growth.

5. Examples of Enabling Technologies Building the Colosseum Built from 70 - 80 AD Structure needed greater support Romans developed the formula for cement Enabled construction of superior structures (Formula was lost in 450 AD until the Renaissance)

6. Examples of Enabling Technologies Putting the squeeze on clots: The Venodyne Boot • Non-invasive technology for DVT. • In use for 30+ years now.

7. Management & Leadership • Experienced CEO • Seasoned Finance Person • Marketing Expertise in Business Sector • Innovative R&D, Product Focus • Regulatory & Clinical Professional • Good counsel • Patent • Corporate • Regulatory • Financial Strength • Venture Capital - Staying Power

8. Factors that Influence Success Technically Proven Product For every vision, there is always an equal and opposite revision. Murphy’s Law # 247

9. First: Have a technically proven product that solves a real problem “Computer number 9 has just discovered a cure for which there is no known disease!”

10. Then prove it . . . • Statistical analysis with sound data • Sales • Professional papers • Doctors acceptance • FDA approval

11. Factors that Influence Success An Exit Strategy Almost everything in life is easier to get into than out of. Murphy’s Law # 325 Corrollary: A marriage license costs $2.00

12. Want to be acquired? • Sales • Profitability • Product with an enabling technology • Strong fundamentals • Strong management team

13. Want to go public? • Sales • Profitability • Product with an enabling technology • Strong fundamentals • Seasoned management team • Timing is critical . . .

14. PUBLIC EQUITY ISSUANCE FOR MEDICAL TECHNOLOGY COMPANIES(as of April 5, 2002) MEDICAL TECHNOLOGY EQUITY MARKET UPDATE (Dollars in Millions) Source: Securities Data Corp. Notes: Values for disclosed transactions only. Labels represent number of completed transactions.

15. Evaluating a Company Whether you are a start up company, a potential investor, interested in M&A, or an IPO . . . you should consider the following checklist.

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17. Thank You

18. MEDICAL TECHNOLOGY EQUITY MARKET UPDATE STOCK PRICE PERFORMANCE 4/05/01 - 4/05/02 Market Cap Weighted; 4/05/01 = 100 Mid/Small Cap Med. Tech. Index (3) All Med. Tech. Companies Index (1) Large Cap Med. Tech. Index (2) S&P 500 Footnotes: (1) Index Includes: ABT, AKSY, AMMD, ANSI, ARRO, ARTC, ASPM, BABY, BAX, BCR, BDX, BMET, BOL, BSTE, BSX, CNMD, COO, CRY, CYBX, CYTC, DJO, EW, GB, GDT, IMDC, IART, ISRG, MDT, MTIX, NOVT, OCLR, OFIX, OTEC, POSS, RITA, RTIX, SNCI, STJ, SYK, VASC, VMSI, WMGI. (2) Index includes: ABT, BAX, BCR, BDX, BMET, BSX, GDT, MDT, STJ, SYK. (3) Index includes: AKSY, AMMD, ANSI, ARRO, ARTC, ASPM, BABY, BOL, BSTE, CNMD, COO, CRY, CYBX, CYTC, DJO, EW, GB, IMDC, IART, ISRG, MTIX, NOVT, OCLR, OFIX, OTEC, POSS, RITA, RTIX, SNCI, VASC, VMSI, WMGI. Source: FactSet.