Copyright © March 12 BDO LLP. All rights reserved. M&A IN THE RECRUITMENT SECTOR – AN ADVISORS PERSPECTIVE CHRISTOPHER CLARK MARCH 2012

Page 2 WHAT I WILL COVER M&A in the recruitment sector – an advisors perspective M&A activity in the sector Valuations How to build an attractive proposition Preparing for a sale process

Page 3 DEAL METRICS UK deals in 2011 M&A in the recruitment sector – an advisors perspective Who were the buyersWho were the sellers Population of 57 deals

Page 4 SPREAD OF DEALS BY SECTOR M&A in the recruitment sector – an advisors perspective

Page 5 £n/d February 2011 Sale of Aston Carter by Baird Capital Partners to Allegis KEY DEALS IN 2011 £n/d March 2011 Sale of Right4Staff by Alchemy Partners to GI Group Sale by a PE house to overseas trade EBITDA to Dec-10 was £3.7m. £15m May 2011 Sale of ITN Mark Education by Ochre House Sale by PE backed, Ochre House, to overseas trade EBITDA margin of c.£3m implies a multiple of 5x. £26m May 2011 Sale of Team 24 to Capita Group plc Private vendor to UK PLC Pro forma operating profit for its financial year to 31 March 2011 of £4.2 million on turnover of £32.7 million £24m with £2m deferred for 1 year based on performance targets Historic EBITDA multiple of 6x. Trade acquisition by Allegis (US) Baird acquired in April 2007 Price was non-disclosed but estimated to be £55m by the FT EBITDA to March 2010 was £6.3m so historic multiple of 8.9x. M&A in the recruitment sector – an advisors perspective £44m July 2011 Secondary buy out of backed by Dunedin Capital Partners Secondary buyout Originally backed by Inflexion in December 2005 EBITDA to March 2011 was £5.5m so a historic multiple of 8.0x Forecast EBITDA to March 2012 was £6.5m so forward multiple of 6.8x.

Page 6 Enterprise Value plus cash less debt (includes invoice discounting) = Equity value In 'asset light' companies, valuation focuses on the earnings/cash generation potential EARNINGSMULTIPLE SIMPLE VALUATION OF YOUR BUSINESS M&A in the recruitment sector – an advisors perspective ENTERPRISE VALUE x=

Page 7 MAXIMISING THE VALUE DRIVERS EARNINGS MULTIPLE CASH GENERATION M&A in the recruitment sector – an advisors perspective Presentation is key ‘Quality’ of the earnings: –Sustainable –Contract element. Cost of investment: –In branches –In new teams –New consultants –New systems Run-rate of earnings/growth prospects. Recruitment sector valuations –Quoted multiples –Other transactions M&A activity in the sector Sector dynamics − high growth, niche etc Scale − Not dependent on key individuals, breadth of management. Business sold on a debt free/cash free basis Balance between investing for future growth and short-term cash generation Efficient tax planning − corporation tax, indirect taxes, employee tax.

Page 8 Listed Recruitment Research EV / TurnoverEV / EBITDA Company NameFYECurrency Share price 29 Feb 12 Current Mcap Enterprise ValueHistoricCurrentForecastHistoricCurrentForecast Michael Page International31-Dec-10 GBP4.541,376.11, x1.30x1.28x16.0x13.2x15.0x Hays30-Jun-11 GBP0.811,119.01, x0.37x0.36x9.6x9.0x8.7x Sthree28-Nov-11 GBP x0.52x0.48x7.7x7.6x6.9x Robert Walters31-Dec-11 GBP x 0.29x8.4x9.4x7.2x Matchtech Group31-Jul-11 GBP x0.18x0.17x7.9x5.6x4.8x Staffline Group31-Dec-11 GBP x0.17x0.15x4.9x4.8x3.9x Harvey Nash Group31-Jan-11 GBP x0.08x 4.9x4.5x5.1x Networkers International31-Dec-10 GBP x0.25x0.24x8.9x6.9x6.4x Morson Group31-Dec-10 GBP x 4.3x4.7x4.5x Hydrogen Group31-Dec-10 GBP x0.13x0.12x6.8x4.6x3.9x Interquest Group31-Dec-10 GBP x0.19x0.17x6.5x5.5x4.2x Empresaria Group31-Dec-10 GBP x0.11x 2.7x3.8x3.2x Servoca30-Sep-11 GBP x0.18xNA4.3x3.9xNA Overall high 1.58x1.30x1.28x16.0x13.2x15.0x Overall low0.09x0.08x 2.7x3.8x3.2x Overall average0.34x0.30x0.29x7.1x6.4x6.2x Overall median 0.20x0.18x0.17x6.8x5.5x4.9x Over £100M EV High 1.58x1.30x1.28x16.0x13.2x15.0x Low0.30x 0.29x7.7x7.6x6.9x Average0.70x0.62x0.60x10.4x9.8x9.5x Median 0.47x0.44x0.42x9.0x9.2x8.0x Sub £100M EV High 0.30x0.25x0.24x8.9x6.9x6.4x Low0.09x0.08x 2.7x3.8x3.2x Average0.17x0.15x0.14x5.7x4.9x4.5x Median 0.18x0.17x0.13x4.9x4.7x4.4x LISTED COMPANY MULTIPLES Qualitative adjustments Current bid premia being experienced are 40% to 70%. Discounts being applied for private companies reflecting the lack of liquidity in the shares and no readily available market are between 37% and 50%. To used the multiples would therefore require adjustment of between 70% to 107% depending on a subjective view of the comparison to the listed companies. This would be influenced by scale and customer or employee concentration. This therefore implies the following multiples as being applicable: 2.7 to 4.1 x based on the low point 3.4 to 5.2x based on the average position M&A in the recruitment sector – an advisors perspective

Page 9 ESSENTIAL STEPS M&A in the recruitment sector – an advisors perspective Withstand sale process Anticipate buyers needs Create confidence Systems − robust and scalable. Business Plan Add backs/exceptionals EBITDA bridge historic to forecast. Exit − personal/ strategic Partial exit. Succession Aligned Incentivisation. Planned sale process Competitive tension Targeted buyers. Working capital Taxation Contingent liabilities. Profitability /growth RationaleInformation Buyers and sale process Cash generation People VALUE MAXIMISATION

Page 10 SUMMARY Buyers Know your market and targets Understand the people agenda – you’ve bought the company, how about the people? What do you bring that will enhance your chances of success Can the synergies really be achieved and enhance value? Sellers When do you want to sell? Plan your strategy for the business accordingly Be realistic in your expectations –A growth company is more valuable than a lifestyle company –Exit or retirement sales can be difficult to achieve A lot of businesses have three year exit plans. M&A in the recruitment sector – an advisors perspective