Within our four areas of investment focus— Healthcare, Life Sciences, Telecommunications, IT & Business Services — we continue to apply the Core Company Investment Strategy, developed by the Millennia Team over the past 20 years, where appropriate to enhance the growth of our portfolio companies. The Core strategy is based on the use of a strategic acquisition program to build a large-scale business around an existing company. Potential Core Companies often operate in fragmented, high growth markets that are undergoing a significant evolution. The Core strategy extends beyond a traditional roll-up or “platform” buyout investment approach. It uses elements of those approaches to accelerate the growth of companies that have already demonstrated that they are positioned to benefit from the application of a proven technology or a shift in industry dynamics. The goal of a Core Company acquisition is typically strategic; the acquired company will add new skills and business opportunities, beyond the horizontal addition of similar operations. Our Core Companies have completed over 160 acquisitions.

Core Company Selection
A Core Company should have strong local or regional market presence, be participating in rapid industry growth, and have competitive advantages from new technologies or other factors that are driving a change in its industry. Core Companies should have the potential to achieve at least $50 million in annual revenues within three to five years. Our Core Company investments often result from proactive research efforts in targeted industries. Once a promising industry segment has been identified, we attend industry conferences and trade shows, conduct data base searches, review trade journals, and undertake telephone research to identify Core Company candidates. We will then contact the management of these companies directly to initiate investment discussions. This form of proactive origination gives Millennia a proprietary deal flow.

Core Company Implementation Examples
Our Core Company strategy mitigates risk in three ways. First, rather than take the risk of developing a new technology, we focus on the implementation of proven technologies as a new solution to an existing customer requirement. This reduces technology risk. Second, the Core strategy concentrates on companies that have revenues and that can grow by making acquisitions, thereby avoiding the risk that a portfolio company’s products or services will not find market acceptance. This minimizes commercialization risk. Third, since the Core strategy involves the consolidation of a fragmented industry, Core Companies are less prone to liquidity risk. If a Core Company is unable to achieve its revenue and income objectives within a reasonable time, its assets and cash flow will typically make it an attractive acquisition target for a larger consolidator in the industry.

Some of the industry segments where Millennia team members have developed Core Companies are listed below.

Core Company	Industry Segment	Business Description	Acquisitions Completed to Date	Exit Value or Market Cap
Verio/NTT Communications (NYSE: NTT)	Telecom Services	Internet Service Providers	65	$6,500 M
IVillage (Nasdaq: IVIL)	Information Technology	Internet Content Providers	9	6,368 M
Via Net.Works (Nasdaq: VNWI)	Telecom Services	International Internet Services Providers	24	4,340 M
Brooks Fiber Properties/MCI Worldcom	Telecom Services	Competitive Local Exchange Carriers	15	2,400 M
HotJobs.com/Yahoo! (Nasdaq: YHOO)	Business Services	Online Recruiting	1	1,857 M
Deltagen (Nasdaq: DGEN)	Life Science	Genomics Data	2	1,265 M
Parexel International (Nasdaq: PRXL)	Healthcare	Contact Pharmaceutical Research	30	1,200 M
Nuvox Communications	Telecom Services	Integrated Communications Providers	9	950 M
Totality	Information Technology	Managed Service Providers	6	327 M
VSPAN	Telecom Services	Conference Services	2	190 M
Netifice	Telecom Services	Workforce Connectivity	1	36 M
Child Health Systems	Healthcare	Pediatric Healthcare Services	8	25 M