Medley Management Inc. (NYSE: MDLY) Investor Presentation Quarter - - PowerPoint PPT Presentation

Medley Management Inc. (NYSE: MDLY)

Investor Presentation Quarter ended June 30, 2016

2

Important Notice to Investors

This presentation contains “forward looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation due to the impact of many factors beyond the control of Medley Management Inc., including those listed in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and our

• ther filings with the Securities and Exchange Commission (“SEC”). Any such forward-looking statements are made pursuant to the safe harbor provisions available under

applicable securities laws and Medley Management Inc.’s assumes no obligation to update or revise any such forward-looking statements except as required by law. Certain information discussed in this presentation (including information relating to portfolio companies) was derived from third party sources and has not been independently verified and, accordingly, the Company makes no representation or warranty in respect of this information. The following slides contain summaries of certain financial and statistical information about Medley Management Inc. The information contained in this presentation is summary information that is intended to be considered in the context of our SEC filings and other public announcements that we may make, by press release or

• therwise, from time to time. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the

achievement of which cannot be assured. You should not view the past performance of Medley Management Inc., or information about the market, as indicative of Medley Management Inc.’s future results. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities of Medley Management Inc. This presentation includes certain non-GAAP financial measures, including Core Net Income, Core EBITDA, Core Net Income Per Share, Pre-Tax Core Net Income per Share, Pre-Tax Core Net Income Margin, Core Net Income Margin and Pro-Forma Weighted Average Shares Outstanding. These measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with U.S. GAAP. Please refer to the appendix of this presentation for a reconciliation of the non-GAAP financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with U.S. GAAP.

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Table of Contents

1. Overview 4 2. Market Opportunity 11 3. Investment Process 16 4. Overview of funds 19 5. Financial Performance 23 6. Appendix 30

OVERVIEW

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• Medley Management Inc. (“Medley” or “MDLY”) is a credit-focused asset

management firm with over $5.0 billion of assets under management (“AUM”) – Asset Manager offering yield-oriented investment products – 51% of AUM in permanent capital vehicles

• Key differentiators supporting growth

– Broad institutional and retail distribution – Direct origination franchise focused on middle market lending – Principals in their 14th year of investing in middle market credit as a team – Scalable platform

5

Overview of Medley Management Inc.

Permanent Capital Vehicles

MEDLEY

(NYSE: MDLY) $5.0 Billion of AUM

Medley's Assets Under Management

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Sierra Income Corporation (“SIC”) Medley Capital Corporation (NYSE: MCC) Institutional Capital SMAs Medley Opportunity Funds Publicly- traded BDC Public non- traded BDC

• Senior team has worked together for 14 years executing a consistent strategy
• Significant investment in people and infrastructure to support growth
• Experienced group of over 40 investment professionals
• Broad employee ownership creates alignment with public shareholders

Long-Dated Funds and Separately Managed Accounts

$0.9 $1.2 $1.5 $2.0 $3.1 $3.3 $3.2

2010 2011 2012 2013 2014 2015 2Q 2016

MCC SIC Institutional Capital $1.0 $1.3 $1.8 $2.3 $3.7 $4.8 $5.0

2010 2011 2012 2013 2014 2015 2Q 2016

MCC SIC Institutional Capital

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Medley’s Historical Growth Profile

• Note: Metrics in billions of USD.

AUM Fee Earning AUM

• Over $5.0 billion of AUM not subject to traditional outflows
• Increasing institutional and retail distribution
• With significant dry powder, we expect growth in FEAUM over time

14% 13% 9% 9% 8% 5% 5% 5% 4% 3% 3% 3% 3% 3% 2% 2% 2% 7% Banking, Finance, Insurance & Real Estate Services: Business Automotive Construction & Building Healthcare & Pharmaceuticals Energy: Oil & gas Hotels, Gaming & Leisure High Tech Industries Aerospace and Defense Retail Beverage & Food Telecommunications Chemicals, Plastics and Rubber Containers, Packaging and Glass Capital Equipment Media: Advertising, Printing & Publishing Consumer Goods: Non-Durable Other

83% 17% Floating Fixed 72% 22% 2% 1% 3% First Lien Second Lien Mezzanine Holdco Notes Equity

23.8 %

22% 15% 28% 19%

Industry Breakout

Portfolio Summary

8

16%

Investment Type Breakout Medley Investments by Geography

Note: Portfolio summary represents total committed amounts as of 6/30/2016 and represents assets in all investment vehicles including TRS and SLS assets. In addition, non-U.S. investments comprise approximately 1% of Medley’s overall investment portfolio.

Floating vs. Fixed Rate

$0.13 $0.14 $- $0.09 $0.18 $0.26 $0.35 3/31/2016 6/30/2016 21.9% 19.9% – 12.5% 25.0% 37.5% 50.0% 3/31/2016 6/30/2016 $0.22 $0.24 $- $0.13 $0.25 $0.38 $0.50 3/31/2016 6/30/2016 38.5% 34.9% – 20.0% 40.0% 60.0% 80.0% 3/31/2016 6/30/2016

Quarterly Financial Results of Operations

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Fee Earning AUM(1) AUM Pre-Tax Core Net Income Margin Pre-Tax Core Net Income Per Share

Note: Metrics in millions of USD, except per share data. 1. “Fee earning AUM” refers to AUM on which we directly earn base management fees. 2. Assumes that all our pre-tax earnings are subject to federal, state and local income taxes at a combined effective tax rate of 43.0%.

Core Net Income Margin(2) Core Net Income Per Share(2)

9% 0% 0% 8% $3,169 $3,158 $- $1,500 $3,000 $4,500 $6,000 3/31/2016 6/30/2016 $5,012 $5,025 $- $1,500 $3,000 $4,500 $6,000 3/31/2016 6/30/2016

$24.6 $29.3 $31.1 $34.0 $40.1 $42.4 $49.0 $47.8 $46.2 $45.2 $40.0 $2,283 $2,602 $3,318 $3,635 $3,682 $3,924 $4,017 $4,002 $4,779 $5,012 $5,025

$- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $- $10 $20 $30 $40 $50 $60 FY13 1Q14 LTM 2Q14 LTM 3Q14 LTM FY14 1Q15 LTM 2Q15 LTM 3Q15 LTM FY15 1Q16 LTM 2Q16 LTM

Core EBITDA Ex Performance Fees AUM

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Results of Operations (Ex Net Performance Fees)(1)

Note: Metrics in millions of USD. 1. Excludes performance fees and related expenses.

• LTM Core EBITDA excluding net performance fees has generally tracked AUM over

time

Annualized Growth:

(1)

37% 21% Core EBITDA AUM

MARKET OPPORTUNITY

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$531 $638 $685 $674 $604 $593 $560 $622 $687 $745 $818 $- $200 $400 $600 $800 $1,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2Q16

Middle Market Opportunity – Large Target Market

1. International Monetary Fund, World Economic Outlook Database, June 2014. Metrics in trillions of USD. 2. Preqin Private Debt Q2 2016 Quarterly Update. Metrics in billions of USD.

Revenue: $50M - $500M

Revenue: $500M - $1B

• Standalone US middle market would rank as the 3rd largest global economy
• Private equity dry powder continues to be elevated at all-time highs

$16.8 $9.2 $6.7 $4.9 $3.6 $2.7 $2.5 $2.2 United States China US Middle Market Japan Germany France UK Brazil

Top GDPs 1 Private Equity Dry Powder 2

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0% 10% 20% 30% 40% 50% 60% 70% 80% 5,000 6,000 7,000 8,000 9,000 10,000 11,000 U.S. FDIC Insured Commercial Banks¹ Bank Participation in Levered Loan Market (%)²

• Banks continue to shift toward large borrowers
• Regulatory environment is a headwind for banks in the middle-market

1. Federal Deposit Insurance Corporation, represents number of commercial banking institutions insured by the FDIC as of 12/31/2015. 2. S&P LCD’s Leveraged Lending Review – 4Q15.

Powerful Secular Trends

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$5T $7T $13T

$- $20 $40 $60 $80 $100 $120

2007 2014 2020

All Other Alternative Investments

$74T $102T $1T $2T $4T

$- $2 $4 $6 $8 $10 $12 $14 2007 2014 2020 All Other Retail

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Alternatives Represent a Growing Segment

• By 2020:

– $102 trillion global AUM – $13 trillion invested in alternatives (over 85% growth from 2014 levels)

• Retail Growing as a % of Alternative Investments:

– By 2020, retail expected to account for 31% ($4 trillion) of alternatives – $2 trillion increase from 2014

Notes: Metrics in trillions of USD. Source: Based on BCG, Global Asset Management 2015: Sparking Growth with Go-to-Market Excellence, July 2015. Preqin, Preqin Investor Outlook: Alternative Assets H1 2015. PWC Asset Management 2020, A Brave New World, June 2015. McKinsey & Company, The $64 Trillion Question: Convergence in Asset Management, February 2015.

Alternative Investments within Total Investments Retail Investments within Alternative Investments

8% 9% 13% $59T $5T $7T $13T

$681 $201 2007 6/30/2016 $0 $50 $100 $150 $200 $250

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Illustrative Potential for Growth

Total Assets of BDCs Potential Opportunity

Regulatory Pressure Continues for Banks

1. Financial firms include: BAC, C, CS, DB, GS, JPM, MS, WFC, Bear Stearns, Countrywide Financial, Merrill Lynch & Washington Mutual. Metrics in billions of USD. Financial information for BAC, C, CS, and DB as of 6/30/2016. All other firms is as of 3/31/2016. 2. BDCs include: ACAS, ACSF, AINV, ARCC, BKCC, CMFN, CPTA, FDUS, FSC, FSIC, FSFR, GAIN, GARS, GBDC, GLAD, GSVC, HCAP, HRZN, HTCG, KCAP, KIPO, MAIN, MCC, MCGC, MRCC, MVC, NGPC, NMFC, OFS, PFLT, PNNT, PSEC, SAR, SCM, SLRC, SUNS, TCAP, TCPC, TCRD, TICC, TINY, TPVG, TSLX and WHF. Metrics in billions of USD. Total assets as of 6/30/2016 for GAIN, BKCC, SLRC, and SUNS. All other assets as of 3/31/2016, with the exception of SAR, MCGC, and MVC which are as of 5/31/2016, 6/30/2015, and 1/31/2015, respectively.

Total Assets of Publicly Traded BDCs 2 Level 3 Assets for Financial Firms 1

BDC Opportunity as Banks Continue to Exit Level 3 Assets

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INVESTMENT PROCESS

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Origination

Underwriting Process & Asset Management

Underwriting Asset Management

1 2 3

• Multi-step approval process
• Documentation process
• 3rd party resources
• Approve 2-4% of opportunities
• Invested in excess of $6 billion

to over 300 companies(1)

Underwriting

2

• Infrastructure – asset

management system

• Weekly, monthly, quarterly

meetings

• Borrower monitoring and

reporting

Asset Management

3

• Over 40 investing & credit

management professionals

• Nationwide platform
• Targeted middle market sectors
• As much as half of annual
• rigination volume is from

repeat or referred borrowers or repeat sponsors

1 Origination

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1. Since inception through 6/30/2016.

2.4% Closed Deals Originated 1,085 Early Read Memo 300 GLM 39 Closed 26 Early Read Memo 234

2015 Pipeline

2.6% Closed Deals Originated 1,400 Early Read Memo 300 GLM 45 Closed 36 Early Read Memo 385

2014 Pipeline

3.2% Closed Deals Originated 1,030 Early Read Memo 300 GLM 47 Closed 33 Early Read Memo 300

2013 Pipeline

Selective Investment Process by Vintage

Senior Secured

• UCC (lien) filings / Cash control /

Covenants Broadly diversified

• Sector / Collateral / Position size /

Geography Thorough diligence

• Deep underwriting by internal team
• Third-party financial review and

independent appraisals Frequent Borrower Contact

• Monthly calls
• Quarterly onsite visits

Monthly Review

• Financial review
• Compliance certificates from borrowers

External checks and balances

• Independent valuation and collateral

analysis

• Third-party loan servicing
• Outside legal counsel

1.1% Closed Deals Originated 1,100 Early Read Memo 300 GLM 24 Closed 12 Early Read Memo 193

LTM 2Q16 Pipeline

Portfolio Construction Active Credit Monitoring

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Note: Closed totals denote the total number of directly originated borrowers.

OVERVIEW OF FUNDS

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First Lien 61% Second Lien 28% Unsecured Debt 5% Equities/Warrants 6% Services: Business 14% Automotive 10% Construction & Building 9% Banking, Finance, Insurance & Real Estate 9% Healthcare & Pharmaceuticals 8% Hotel, Gaming & Leisure 8% Containers, Packaging & Glass 5% Aerospace & Defense 5% Energy: Oil & Gas 5% Telecommunications 4% Other 23%

$1,270 $1,067 $1,062 $1,067 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 6/30/2015 6/30/2016 3/31/2016 6/30/2016

Medley Capital Corporation

• NYSE: MCC (Market cap: $367 million as of

6/30/2016)

• $1.1 billion in total assets (fee earning AUM

equivalent) and $534 million in equity

• Diversified portfolio across 63 portfolio companies

(Top 20 are 53%)

• 12.0% weighted average portfolio yield as of

6/30/2016(1)

• Gross investment originations of $12 million for

the quarter ended 6/30/2016

• 78.2% floating rate & 21.8% fixed rate on income

bearing investments

• Total debt/credit facility commitments of $945

million(2)

Note: Metrics in millions of USD and data is exclusive of MCC SLS assets, unless stated otherwise.

• 1. Represents annualized portfolio yield to maturity, excluding fees, while utilizing industry standard forward LIBOR curve assumptions.

2. SBA regulations currently limit the amount that we may borrow to a maximum of $150 million based upon at least $75 million in regulatory capital. As of 6/30/2016, we have at least $75.0 million in regulatory capital which allows us to borrow up to $150 million from SBA.

Highlights Portfolio by Industry Portfolio by Asset Class

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0%

Fee Earning AUM Growth

First Lien 58% Second Lien 31% Subordinated Debt 4% Equities/Warrants 7% Services: Business 17% Automotive 10% Multi-Sector Holdings 9% Hotel, Gaming & Leisure 8% Aerospace & Defense 7% Banking, Finance, Insurance & Real Estate 7% Retail 6% Construction & Building 4% Healthcare & Pharmaceuticals 4% Wholesale 4% Other 24%

$971 $1,132 $1,097 $1,132 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 6/30/2015 6/30/2016 3/31/2016 6/30/2016

Sierra Income Corporation

• Sierra Income Corporation is a senior debt

focused non-traded public BDC launched in 2012

• Capital is being raised through 180 broker dealers

and over 18,000 RIAs

• $1.1 billion in fee earning AUM and $864 million

in gross equity raised, as of 6/30/2016

• 10.6% weighted average yield for total

investments for the quarter ended 6/30/2016

• Diversified portfolio across 94 portfolio

companies(1)

• 86.0% floating rate & 14.0% fixed rate loans
• Three credit facilities to facilitate growth,

including a TRS with Citibank, revolving credit facility with ING and revolving credit facility with JPMorgan

Portfolio by Industry Portfolio by Asset Class Highlights

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Note: Metrics in millions of USD, unless stated otherwise.

• 1. Excludes TRS and SIC SLS investments.

Fee Earning AUM Growth

First Lien 79% Second Lien 11% Mezzanine 2% Holdco Notes 2% Equity 6% Banking, Finance, Insurance & Real Estate 19% Construction & Building 13% Healthcare & Pharmaceuticals 12% Automotive 9% Services: Business 9% Beverage & Food 5% High Tech Industries 5% Energy: Oil & gas 5% Hotels, Gaming & Leisure 4% Chemicals, Plastics and Rubber 4% Other 15%

$1,109 $959 $1,010 $959 $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 6/30/2015 6/30/2016 3/31/2016 6/30/2016

Portfolio by Industry Portfolio by Asset Class

Institutional Capital

Note: Metrics in millions of USD, unless stated otherwise.

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• Institutional AUM remained at $2.5B during the

quarter ended 6/30/2016

• Private Funds and SMAs generally operate without

leverage

• Allocations from major public pensions and insurance

companies

• Focus on senior secured loans
• Diversified portfolio across 74 portfolio companies

Highlights Fee Earning AUM Growth

FINANCIAL PERFORMANCE

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(Dollars in thousands except per share amounts) Revenues Management fees $ 18,695 $ 20,923 $ 34,958 $ 38,443 Performance fees 851 (2,368) 260 3,968 Other income and fees 1,780 1,981 3,679 3,605 Total revenues 21,326 20,536 38,897 46,016 Expenses Compensation and benefits 8,564 6,397 14,432 13,618 Performance fee compensation 45 (1,030) (26) (918) General, administrative and other expenses 8,899 4,623 16,878 9,130 Total expenses 17,508 9,990 31,284 21,830 Other income (expense) Dividend income 221 221 443 443 Interest expense (2,072) (2,109) (4,190) (4,194) Other income (expenses), net (863) 13 (1,614) (249) Total other expense, net (2,714) (1,875) (5,361) (4,000) Income before income taxes 1,104 8,671 2,252 20,186 Provision for income taxes 102 918 214 2,066 Net income 1,002 7,753 2,038 18,120 405 (274) 668 1,016 $ 597 $ 8,027 $ 1,370 $ 17,104 Core Net Income (1) $ 6,563 $ 10,409 $ 12,528 $ 22,176 Core EBITDA 9,753 13,858 18,820 29,320 Core Net Income per share (2) $ 0.14 $ 0.22 $ 0.26 $ 0.47 Core Net Income Margin (3) 19.9% 32.6% 20.8% 31.1% Pro Forma Weighted Average Shares Outstanding (4) For the Three Months Ended June 30, (Unaudited) 2016 2015 (Unaudited) 2016 2015 30,771,830 30,437,467 For the Six Months Ended June 30, 30,587,862 30,456,596 Less: Net income attributable to non-controlling interests in consolidated subsidiaries Net income attributable to Medley Management Inc. and non- controlling interests in Medley LLC

Standalone Income Statement

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(Dollars in thousands except per share amounts) $ 597 $ 8,027 $ 1,370 $ 17,104 Reimbursable fund startup expenses 5,541 1,995 10,744 4,169 IPO date award stock-based compensation 673 688 1,346 1,418 Other non-core items (1) 521

• 521

137 Income tax expense (benefit) on adjustments (769) (301) (1,453) (652) Core Net Income $ 6,563 $ 10,409 $ 12,528 $ 22,176 Interest expense 2,072 2,109 4,190 4,194 Income taxes 871 1,219 1,667 2,718 Depreciation and amortization 247 121 435 232 Core EBITDA $ 9,753 $ 13,858 $ 18,820 $ 29,320 The calculation of Net Income Per Share is as follows: $ 6,563 $ 10,409 $ 12,528 $ 22,176 Add: Income taxes 871 1,219 1,667 2,718 Pre-tax Core Net Income 7,434 11,628 14,195 24,894 Denominator Class A shares issued in IPO 5,777,726 6,000,000 5,814,428 6,000,000 Conversion of LLC Units to Class A shares 23,333,333 23,333,333 23,333,333 23,333,333 Restricted stock units 1,660,771 1,104,134 1,440,101 1,123,263 Pro-Forma Weighted Average Shares Outstanding 30,771,830 30,437,467 30,587,862 30,456,596 Pre-tax Core Net Income Per Share $ 0.24 $ 0.38 $ 0.46 $ 0.82 Less corporate income taxes per share (2) (0.10) (0.16) (0.20) (0.35) Core Net Income Per Share $ 0.14 $ 0.22 $ 0.26 $ 0.47 Net income attributable to Medley Management Inc. and non- controlling interests in Medley LLC 2016 2015 2016 2015 (Unaudited) (Unaudited) Numerator Core Net income The reconciliation of Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC to Core Net Income and Core Net Income to Core EBITDA is as follows: For the Six Months Ended June 30, (Unaudited) 2016 2015 For the Three Months Ended June 30, (Unaudited) 2016 For the Three Months Ended June 30, For the Six Months Ended June 30, 2015

Standalone Income Statement (Cont.)

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1. For the three and six months ended 6/30/2016, other non-core items consists of a $0.5 million impairment loss on our investment in MOF I LP. For the six months ended 6/30/2015, other non-core items consists of a one-time $0.1 million severance cost to former employees. 2. Represents a per share adjustment for income taxes assuming that all of our pre-tax earnings were subject to federal, state and local income taxes. We assumed an effective corporate tax rate of 43.0% for all periods presented.

(Dollars in thousands except per share amounts) As of (Unaudited) Assets Cash and cash equivalents $ 56,294 $ 71,688 Investment, at fair value 15,064 16,360 Management fees receivable 16,244 16,172 Performance fees receivable 2,799 2,518 Other assets 17,166 13,015 Total assets $ 107,567 $ 119,753 Liabilities and Shareholders' Equity Loans payable $ 101,163 $ 100,871 Accounts payable, accrued expenses and other liabilities 35,232 34,746 Performance fee compensation payable 1,449 1,823 Total liabilities 137,844 137,440 Redeemable Non-controlling Interest 12,595

• Stockholders' Equity

Class A common stock 58 60 Class B common stock

• Additional paid-in-capital (capital deficit)

1,219 631 Retained earnings (accumulated deficit) (3,293) (730) Total stockholders' equity, Medley Management Inc. (2,016) (39) Non-controlling interests in consolidated subsidiaries (2,054) (459) Non-controlling interests in Medley LLC (38,802) (17,189) Total deficit (42,872) (17,687) $ 107,567 $ 119,753 June 30, 2016 December 31, 2015 Total liabilities, redeemable non-controlling interest and Equity

Standalone Balance Sheet

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($ in millions) MCC SIC Institutional Capital Total ($ in millions) MCC SIC Institutional Capital Total Q1 2016 $1,334 $1,184 $2,494 $5,012 Q2 2015 $1,454 $1,120 $1,443 $4,017 Commitments(1) 2 25 3 30 Commitments(1) 12 165 1,214 1,391 Capital reduction(2)

• Capital reduction(2)

(23)

• (23)

Distributions(3) (16) (18) (29) (63) Distributions(3) (66) (66) (184) (316) Change in fund value(4) 14 26 6 46 Change in fund value(4) (43) (2) 1 (44) Q2 2016 $1,334 $1,217 $2,474 $5,025 Q2 2016 $1,334 $1,217 $2,474 $5,025 QoQ Increase (Decrease) 0% 3%

• 1%

0% LTM Increase (Decrease)

• 8%

9% 71% 25% 27

Assets Under Management

Note: Percentage change calculations shown are based on actual numbers and may differ from rounded calculations. 1. With respect to permanent capital vehicles, represents increases during the period through equity and debt offerings, subject to restrictions, as well as any increases in available undrawn borrowings or capital commitments. With respect to institutional capital, represents new commitments or gross inflows, respectively, as well as any increases in available undrawn borrowings. 2. Represents the permanent reduction in equity or leverage during the period. 3. With respect to permanent capital vehicles, represents distributions of income. With respect to long-dated private funds and SMAs, represents return of capital, given our funds’ stage in their respective life cycle and prioritization of capital distributions. 4. Includes interest income, realized and unrealized gains (losses), fees and/or expenses.

MCC SIC Inst. Capital

• AUM remained at $1.3 billion in Q2 2016
• AUM decreased by 8% vs. Q2 2015, a decrease of $120 million
• AUM increased by 3% to $1.2 billion vs. Q1 2016
• AUM increased by 9% vs. Q2 2015, an increase of $97 million
• AUM decreased 1% to $2.5 billion vs. Q1 2016
• AUM increased by 71% vs. Q2 2015, an increase of $1.0 billion

Q2 2016 HIGHLIGHTS

Q2 2016 AUM Rollforward LTM AUM Rollforward

($ in millions) MCC SIC Institutional Capital Total ($ in millions) MCC SIC Institutional Capital Total Q1 2016 $1,062 $1,097 $1,010 $3,169 Q2 2015 $1,270 $971 $1,109 $3,350 Commitments(1) 7 27 2 36 Commitments(1) (70) 229 67 226 Capital reduction(2)

• Capital reduction(2)

(23)

• (23)

Distributions(3) (16) (18) (51) (85) Distributions(3) (67) (66) (154) (287) Change in fund value(4) 14 26 (2) 38 Change in fund value(4) (43) (2) (63) (109) Q2 2016 $1,067 $1,132 $959 $3,158 Q2 2016 $1,067 $1,132 $959 $3,158 QoQ Increase (Decrease) 0% 3%

• 5%

0% LTM Increase (Decrease)

• 16%

17%

• 14%
• 6%

28

Fee Earning Assets Under Management

Note: Percentage change calculations shown are based on actual numbers and may differ from rounded calculations. 1. With respect to permanent capital vehicles, represents increases or temporary reductions during the period through equity and debt offerings, as well as any increases in capital

• commitments. With respect to institutional capital, represents new commitments or gross inflows.

2. Represents the permanent reduction in equity or leverage during the period. 3. Represents distributions of income, return of capital and return of portfolio investment capital to the fund. 4. Includes interest income, realized and unrealized gains (losses), fees and/or expenses.

Q2 2016 Fee Earning AUM Rollforward LTM Fee Earning AUM Rollforward

MCC SIC Inst. Capital

• Fee Earning AUM remained at $1.1 billion in Q2 2016
• Fee Earning AUM decreased by 16% vs. Q2 2015, a decrease of $203 million
• Fee Earning AUM increased 3% to $1.1 billion vs. Q1 2016
• Fee Earning AUM increased by 17% vs. Q2 2015, an increase of $161 million
• Fee Earning AUM decreased 5% to $1.0 billion vs. Q1 2016
• Fee Earning AUM decreased by 14% vs. Q2 2015, a decrease of $150 million

Q2 2016 HIGHLIGHTS

2016 Potential Dividend Schedule

29

Remaining Key Dates for 2016

Event Q2 2016 Q3 2016 Q4 2016 Declaration Date August 9, 2016 November 10, 2016 February 9, 2017 Record Date August 24, 2016 November 22, 2016 February 23, 2017 Payment Date September 6, 2016 December 5, 2016 March 6, 2017

Historical Dividends

Event Q2 2015 Q3 2015 Q4 2015 Q1 2016 Declaration Date August 10, 2015 November 12, 2015 February 6, 2016 May 10, 2016 Record Date August 26, 2015 November 27, 2015 February 24, 2016 May 24, 2016 Payment Date September 4, 2015 December 4, 2015 March 4, 2016 June 2, 2016 Per Share Payout $0.20 $0.20 $0.20 $0.20

Note: Dividends are declared and approved at the discretion of the Board of Directors.

APPENDIX

30

31

Endnotes & Definitions

Definitions: “Assets Under Management” or “AUM” refers to the assets of our funds, which represents the sum of the NAV of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods). “Core Earnings Before Interest, Income Taxes, Depreciation and Amortization (Core EBITDA)” is calculated as Core Net Income before interest expense, income taxes, depreciation and amortization. “Core Net Income” is calculated by adjusting net income attributable to Medley Management Inc. and net income attributable to non-controlling interests in Medley LLC to exclude reimbursable expenses associated with the launch of funds, amortization of stock-based compensation expense associated with grants of restricted stock units at the time of our IPO, other non-core items and the income tax impact of these adjustments. “Core Net Income Margin” equals Core Net Income Per Share divided by total revenue per share. “Core Net Income Per Share” is Core Net Income adjusted for corporate income taxes assuming that all of our pre-tax earnings are subject to federal, state and local corporate income taxes, divided by Pro-Forma Weighted Average Shares Outstanding (as defined above). In determining corporate income taxes we used an annual effective corporate tax rate of 43.0%. “Fee Earning Assets Under Management” refers to the assets under management on which we directly earn base management fees. “Pre-Tax Core Net Income” is calculated as Core Net Income excluding the impact of income taxes. “Pre-Tax Core Net Income Margin” equals Pre-Tax Core Net Income Per Share divided by total revenue per share. “Pre-Tax Core Net Income Per Share” is calculated as Pre-Tax Core Net Income divided by Pro-Forma Weighted Average Shares Outstanding. “Pro-Forma Weighted Average Shares Outstanding” assumes the conversion by the pre-IPO holders of 23,333,333 LLC Units for 23,333,333 shares of Class A common stock at the beginning of each period presented, as well as the vesting of the weighted average number of restricted stock units during each of the periods presented.

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Corporate Information

Board of Directors BROOK TAUBE Co-Chairman SETH TAUBE Co-Chairman JEFF TONKEL Director JEFFREY T. LEEDS Independent Director GUY ROUNSAVILLE, JR. Independent Director PHILIP K. RYAN Independent Director Corporate Officers BROOK TAUBE Co-Chief Executive Officer SETH TAUBE Co-Chief Executive Officer JEFF TONKEL President RICHARD T. ALLORTO, JR. Chief Financial Officer JOHN FREDERICKS General Counsel & Secretary Research Coverage CREDIT SUISSE Craig Siegenthaler - (212) 325-3104 DEUTSCHE BANK Stephen Laws - (901) 322-8212 KEEFE, BRUYETTE & WOODS Ann Dai - (212) 887-3688 LADENBURG THALMANN & CO. Mickey Schleien - (305) 572-4131 FBR & CO. Christopher Nolan - (646) 412-7690 Corporate Headquarters 280 Park Avenue, 6th Floor East New York, NY 10017 (212) 759-0777 Investor Relations SAM ANDERSON Head of Capital Markets & Risk Management (212) 759-0777 Corporate Counsel SIMPSON THACHER & BARTLETT LLP New York, NY Independent Registered Public Accounting Firm RSM US, LLP New York, NY Securities Listing NYSE: MDLY (Common Stock) Transfer Agent AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC (888) 777-0324 Media Contact FITZROY COMMUNICATIONS (212) 498-9197