Preparing Your Online Recruitment Business for Investment or Acquisition

1. Preparing Your Online Recruitment Business for Investment or Acquisition Getting Bigger or Getting Out By 2017 Randy Mehl Partner Baird Capital 2014 IAEWS Spring Congress

2. Introduction 2014 IAEWS Spring Congress

3. Robert W. Baird & Co. • Helping clients achieve their asset management, wealth management, capital markets and private equity goals for 95 years A Comprehensive Financial Services Firm Private Equity CapitalMarkets Europe United States Asia Private Wealth Management Asset Management • *As of May 14, 3013. • **Greenwich Associates U.S. Equity Investors – Small/Mid-Cap Funds, April 2012. Surveys conducted with 94 U.S. small-cap and mid-cap fund managers. Rankings based on top 10 research firms in survey. • ***Baird and its operating affiliates have offices in the United States, Europe and Asia. Robert W. Baird Ltd. and Baird Capital Partners Europe are authorized and regulated in the UK by the Financial Conduct Authority. 2014 IAEWS Spring Congress

4. Baird and Online Recruitment • A leading capital markets firm in the Human Capital and Recruitment sector Baird Capital Investment Banking Equity Research Conferences • Solid track record of successful investments in the HCM and Recruitment areas • Over 50 dedicated investment bankers in Business and Technology Services, including HCM • 27 years of research excellence in the Human Capital sector • Longest standing investor conferences addressing HCM and Recruitment 2014 IAEWS Spring Congress

5. Baird Capital – Global Platform • China Growth Equity • Headquartered in Shanghai • Seven investment professionals • $72 million under management • US Private Equity • Headquartered in Chicago • 15 Investment professionals • Raised and managed $880 million • US Venture Capital • Headquartered in Chicago • 5 Investment professionals • Raised and managed $272 million • UK Private Equity • Headquartered in London • Four investment professionals • Raised and managed £860 million 2014 IAEWS Spring Congress

6. Agenda • Online Recruitment M&A Activity • Preparing for a Sale or Investment – Critical Questions • Exit Planning – The Long-Term Plan • Exit Planning – The Short-Term Plan • Closing the Deal 2014 IAEWS Spring Congress

7. Investment Activity in Online Recruitment 2014 IAEWS Spring Congress

8. Online Recruitment Activity Acquired Acquired Acquired Acquired By Acquired Received $70M Investment Oct / Nov 2013 September 2012 February 2014 April 2014 June 2012 May 2012 Acquired Acquired Acquired Received $10M Investment Acquired Initial Public Offering February 2014 November 2013 February 2014 April 2012 October 2013 August 2010 Acquired Acquired Acquired Acquired Acquired Acquired March 2014 December 2009 Aug/Sep 2011 December 2011 April 2013 April 2014 2014 IAEWS Spring Congress

9. Online Recruitment – Why So Active? • Attractive market characteristics • As economic conditions improve, talent acquisition becomes costly • Workforce complexity increasing – part-time, contingent and freelance workforce • Disruption factors – aggregators, social, mobile • Big guys want to stay relevant • Access to the passive candidate e.g., go vertical • Address the “hot” areas of social, mobile • Empower the employers e.g., data analytics • Lots of capital available 2014 IAEWS Spring Congress

10. Lots of Capital Available • Improving economic conditions + easy money policy = More M&A ! • Investors are sitting on over $1 trillion in dry powder • Credit markets are supportive of increased leverage and offering cheaper interest • Corporate balance sheets flush with cash 2014 IAEWS Spring Congress

11. Preparing For Exit 2014 IAEWS Spring Congress

12. Preparing for Exit – Critical Questions • What are your objectives? • Retirement? • Portfolio diversification? • Financial backing to grow? • Strike while the iron is hot? • Stop the bleeding? • What is your timeframe? • How realistic are your expectations? 2014 IAEWS Spring Congress

13. Exit Planning – The Long-Term Plan Goal is to maximize value! • Private Equity buyers value a standalone business… • Addressing the most relevant areas of the market • Persistent revenue streams e.g., subscription pricing, recurring client demand • Good margin and cash flow characteristics • Scalable business model • Runway • Strategic buyers value… • Whatever they happen to need to grow at that point (Offense!) • Less competition (Defense!) 2014 IAEWS Spring Congress

14. Exit Planning – The Long-Term Plan Ideas for “Investment” • Fill out the management team • “Fireside Chats” with strategic buyers, industry experts • Position the business to address “future” growth areas e.g., vertical focus, recruiter analytics tools • Formalize key functions (BD, marketing, training, HR, Accounting) • Consider an audit • New business capacity! 2014 IAEWS Spring Congress

15. Exit Planning – The Short-Term Plan Goal is to close the transaction! • Define your objective and stay focused on it! • Identify the most likely buyer groups • Engage good advisors – intermediary, lawyer, accountant • Prepare for some pain • Process typically lasts between 60 days to a full year – big distraction • Transaction typically costs a small-to-medium sized seller between $300k-$1m 2014 IAEWS Spring Congress

16. Today’s Buyers – PE versus Strategic 2014 IAEWS Spring Congress

17. Sale Process Timeline 2014 IAEWS Spring Congress

18. Closing Checklist 2014 IAEWS Spring Congress

19. Exit Planning – Close the Transaction Do it right the first time! 2014 IAEWS Spring Congress

20. Preparing Your Online Recruitment Business for Investment or Acquisition Getting Bigger or Getting Out Randy Mehl Baird Capital rmehl@rwbaird.com 2014 IAEWS Spring Congress