Human Resources Outsourcing

(1)

www.highbank.com

Separating

Knowledge

from

Beliefs

Q1 Economic Overview: Welcome to Last Year

Q1 was marked by increased economic confidence, an improving labor market in the U.S. and

strong global equity markets. As the first quarter ended and the second quarter began however,

the improvement in the economy and equity markets began looking increasingly fragile. Sound

familiar? Welcome to last year.

As we outlined in our 2012 Economic Outlook issued in January (

link

), the global economy’s road

to recovery will be choppy and halting. Years of over-leverage by both consumers and

governments will take years (not quarters) to reverse, creating an “overhang” which will reduce

the level of robust growth which is typical of a post-deep recession. In the meantime (through

2014 in our view), the state of the U.S. housing market and sovereign debt and budgetary

challenges will continue to negatively impact investor confidence.

None of this is to say that

things are not improving

economically. As noted in the

economic dashboard, across a

wide

range

of

economic

statistics

conditions

look

better. However, we should all

remain cautious as to the

growth we can expect over the

next couple years. Although in

our view the U.S. is well

insulated

from

another

recession, we expect more of a

“plodding along” economically

as opposed to an accelerating

sprint.

Economic Dashboard Month

Oct '11 Nov '11 Dec '11 Jan '12 Feb '12 Mar '12

Real GDP (% Q/Q) - - 2.8% - - 2.2%

S&P 500 (^SPX) 1,253 1,247 1,258 1,312 1,366 1,408

10.8% (0.5)% 0.9% 4.4% 4.1% 3.1%

Volatility S&P 500 (^VIX) 30.0 27.8 23.4 19.4 18.4 15.5

(30.3)% (7.2)% (15.8)% (16.9)% (5.2)% (15.9)%

MSCI World Index (MXWO) 1,217 1,185 1,183 1,241 1,299 1,312

10.3% (2.7)% (0.2)% 4.9% 4.7% 1.0%

Consumer Sentiment 60.8 63.7 69.9 75.0 75.3 76.2

(Michigan) 2.2% 4.8% 9.7% 7.3% 0.4% 1.2%

U.S. Unemployment Rate 8.9% 8.7% 8.5% 8.3% 8.3% 8.2%

Initial Unemployment Claims

320 340 360 380 400 420 7 -O ct 1 4 -O ct 2 1 -O ct 2 8 -O ct 4 -N o v 11 -N ov 1 8 -N o v 25 -N ov 2 -D e c 9 -D e c 16 -D ec 2 3 -D ec 30 -D ec 6-Ja n 1 3 -J an 2 0 -J an 2 7 -J an 3-Feb 10 -F eb 1 7 -F eb 24 -F eb 2 -M a r 9 -M a r 16 -M ar 2 3 -M ar 30 -M ar 6 -A p r 1 3 -A p r EST

Sector Highlights…



SaaS and cloud based services are

increasingly becoming the industry

standard



HROs are focused on developing

multinational platforms



M&A continues to be the optimal

path for HROs in building scale and

product depth

HighBank Advisors LLC

One South Street

Suite 860

Baltimore, MD 21202

(443) 478-1980

www.highbank.com

HighBank is a

Baltimore-based, full services

mid-market investment bank

and financial advisory

firm. HighBank provides

advice on mergers and

acquisitions,

raising

capital, exit & transaction

planning,

business

valuation opinions, debt

restructurings

and

distressed asset sales.

HighBank was formed on

a mission that our clients

and our people deserve

to have their highest

expectations met and to

receive higher value for

their

investments

of

money and time.

Human Resources Outsourcing

(2)

Trends in Human Resource Outsourcing

HighBank’s indices of estimated forward revenue multiples (next twelve months) among publicly-traded HRO companies have

improved

~

13% to

~

44% over the past two quarters, and there is reason to believe this trend will continue as the HRO

landscape is poised for continued growth through 2012. Market expansion is anticipated among multi-national sourcing,

payroll and related administrative outsourcing functions. The ability to manage administrative functions for employees

worldwide will gain in importance

as more employers hire foreign

workers and regulation continues

to complicate existing HR functions.

Additionally, technology is fueling

the growth of self-service offerings

enabling

HR

departments

to

implement

HRO

solutions

themselves, cutting intermediaries

and consultants in the process. As

Internet and mobile connectivity

become

more

prevalent,

HR

departments will continue to look

for

streamlined

self-service

solutions (i.e. job posting, benefits

management, etc.). Employees will

also migrate to the cloud to

manage their benefits and other

related HR components.

With many HRO service contracts

due for renewal, providers offering multi-national, integrated HR service with new and innovative technology are poised to

experience the most growth.

As employers look to drive improved performance and efficiency, we anticipate an increased use of analytics to identify

business insights and related strengths and weaknesses. Jill Goldstein, the HR BPO Lead at Accenture, believes “HRO started off

as a cost reduction move for some companies…it has expanded well beyond that to become a driving force for creating

business value.” To that extent, she believes a new type of HRO customer will emerge, one focused on “driving improvements

in workforce operations, costs, and results…blurring the lines between consulting and outsourcing.”

Trends in HRO M&A

Several themes are becoming increasingly evident in HRO M&A today: (i) increased focus on acquiring SaaS companies (e.g.,

Oracle acquiring Taleo (02/2012) and SAP acquiring SuccessFactors (12/2011)); (ii) vendors continue to broaden the breadth

and depth of the capabilities of their HRO service portfolio (e.g., ADP acquiring The RightThing (10/2011) and Workscape

(07/2010)), and; (iii) the race to enter new, emerging geographies.

HRO firms are increasingly focused on leveraging SaaS and cloud-based models to swiftly and effectively scale and create more

cost-efficient platforms. SaaS and cloud-based technologies unburden the end user from having to make significant upfront

and ongoing technology investments, as the technology infrastructure is developed and maintained by the service provider.

This enables enterprises to focus on their core business, while simultaneously becoming more agile. Recent blockbuster

partnerships and acquisitions such as Northgate Arinso’s partnership with Workday (10/2011) brings multi-country payroll to

Forward Enterprise Value / Revenue Multiples

Source: HighBank Indices

Market Data provided by S&P Capital IQ as of March 31, 2012

90%

100%

110%

120%

130%

140%

150%

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

HR Administrative & Outsourcing Services

HR Technology

Staffing & Recruiting Services

13.4%

44.4%

(3)

HRO firms will continue to form strategic partnerships or acquire companies expected to help them build capabilities. Kenexa’s

acquisition of Batrus Hollweg (11/2011), Randstad’s acquisition of SourceRight (The SFN Group) (07/2011), ADP’s acquisition of

The RightThing (10/2011) and Mercer’s acquisition of Conseo (09/2011) are examples of such capability building. We anticipate

M&A activity to be strong specifically among software suite providers and consultancies, as clients are looking for more

integrated products and support.

HRO firms will continue to look for acquisitions that strategically allow them to enter new geographies or further solidify their

position in emerging markets. ADP’s acquisition of Ma Foi Consulting (01/2012) and Manpower’s acquisition of Xi'an Fesco

(06/2011) are examples of geographic expansion. We anticipate M&A activity to be strong with multi-national organizations

looking to acquire region specific firms that build them a presence and enhance their knowledge of local laws and regulations.

The M&A Outlook

According to CaptialIQ, the number of M&A deals in the first quarter 2012 was similar to the first quarter of 2011. That said,

with fewer mega deals, reported transaction values experienced a substantial decline, having fallen 37% over the same period.

Data compiled from Dealogic indicates that Q1 2012 worldwide M&A marks the slowest start to a year since 2003. That said,

there are many factors, including high corporate cash balances, substantial amounts of un-invested capital from private equity

firms, low interest rates and slowing top-line growth corporate growth, that, when viewed collectively, create an environment

conducive to increased transaction volumes.

Further, pending tax legislation is a hotly-debated national topic that is not only central to this November’s Presidential Election

but may also play a role in driving 2012 deal flow. The long term capital gains rate of 15% will increase to 20% upon the

expiration of the Bush-tax cuts. In addition, many upper-income taxpayers (e.g., business owners) will be subject to a new 3.8%

Medicare tax on investment income. The resulting potential tax increase of almost 60% (from 15% to 23.8%) creates a strong

incentive for U.S. business owners that were considering selling to complete a transaction by year end.

U.S. Historic M&A Deal Volume and Value

Source: S&P CapitalIQ

776 549 676 677 595 811 858 733 801 897 759 1,3 3 9 1 ,0 3 7 927 1,1 1 3 1 ,0 1 4 942 1,2 0 3 1 ,1 0 8 992 1,0 7 2 1 ,1 0 8 1 ,0 4 5 1 ,7 7 9 1 ,2 7 0 985 1,1 7 3 1 ,1 4 1 1 ,1 5 7 1 ,3 1 4 1 ,2 0 3 1 ,1 9 1 1 ,1 7 9 1 ,1 6 4 1 ,0 8 4 1 ,4 6 9 1 ,2 0 5 926 764 $120 $18 $72 $31 $17 $13 $94 $16 $27 $114 $97 $71 $32 $101 $40 $43 $33 $91 $78 $65 $32 $87 $94 $89 $78 $50 $50 $110 $66 $98 $80 $66 $69 $47 $55 $87 $49 $53 $55 $0 $20 $40 $60 $80 $100 $120 $140 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Ja n-0 9 Fe b-0 9 M ar -0 9 A pr -0 9 M ay -0 9 Ju n-0 9 Ju l-0 9 A ug -0 9 Se p -0 9 O ct -0 9 N ov -0 9 D e c-0 9 Ja n-1 0 Fe b-1 0 M ar -1 0 A p r-1 0 M ay -1 0 Ju n-1 0 Ju l-1 0 A ug -1 0 Se p-1 0 O ct -1 0 N ov -1 0 D e c-1 0 Ja n-1 1 Fe b-1 1 M ar -1 1 A p r-1 1 M ay -1 1 Ju n-1 1 Ju l-1 1 A ug -1 1 Se p -1 1 O ct -1 1 N ov -1 1 D e c-1 1 Ja n-1 2 Fe b-1 2 M ar -1 2 U .S . M & A D is cl os e d D e al V al ue ( $ in B ill ions ) U .S . M & A D e al V ol um e

(4)

Select HRO M&A Transactions

M&A transaction activity within the highly-fragmented HRO market has been high, and is expected to remain strong

throughout 2012. Valuations are strongest for HR technology providers, followed by HR administrative and outsourcing

companies and then staffing firms. Strategic acquirers have dominated the M&A landscape.

The single most important trend impacting the HR Technology space has been the comprehensive shift to a cloud or SaaS based

model. Using a cloud based platform allows service providers to offer a comprehensive suite of products to clients at lower

costs and with minimal ongoing maintenance expenses. Companies are acquiring SaaS companies and integrating the target

companies’ offerings into their own solution.

Within the HR administrative and outsourcing segment, M&A has been active within payroll, workforce management and

background screening. Transactions have included companies seeking to broaden their offerings, expand geographically and

consolidate smaller providers.

The recent activity in the staffing and executive search verticals has been focused largely on the creation of specialized delivery

models, as evidenced by Adecco’s recent acquisition spree. Three out of four related transactions over the past 15 months

have focused on the strategic expansion of specialty staffing (engineering, nursing, medical, and technical) capabilities.

Moreover, with continued global austerity measures, and inconsistent business trends, skittish management teams will

continue to delay hiring, in lieu of temporary support.

($ in millions)

Target Transaction Enterprise Value /

Date Acquirer Value Revenue EBITDA Target Business Description

HR Administrative & Outsourcing Services

Apr-12 BackCheck

Sterling Infosystems, Inc. N/A N/A N/A

Canada's largest provider of background checking services, and one of the largest providers of background checking in the United Kingdom

Mar-12Ready Set Work, LLC

PrimePay, Inc. N/A N/A N/A Offers online and mobile employee scheduling services Mar-12SHPS Human Resources Solutions Inc.

Automatic Data Processing, Inc. (NasdaqGS:ADP) N/A N/A N/A Provides human resource and general management services Feb-12 Dayforce, Inc.

Ceridian Corporation N/A N/A N/A

Offers labor forecasting, scheduling, budgeting, task management, time and attendance, employee self-service, strategy, implementation and training

Feb-12 Valtera Corporation

Corporate Executive Board Co. (NYSE:EXBD) $23.5 N/A N/A

Provides leadership assessment, testing and selection, employee engagement, surveys and analytics, HR legal support, organizational diagnostics, performance management, custom research and technology Jan-12 Ma Foi Consulting Solutions Ltd. (Randstad)

Automatic Data Processing, Inc. (NasdaqGS:ADP) N/A N/A N/A Offers managed payroll services and social benefits administration in India Jan-12 Icon Time Systems, Inc.

Paychex, Inc. (NasdaqGS:PAYX) N/A N/A N/A Develops time and attendance solutions Dec-11 Smart Payroll Solutions

Oasis Outsourcing, Inc. N/A N/A N/A

Provides payroll processing, comprehensive human resources, benefits administration, risk management and workers’ compensation services

Dec-11 Acxiom Information Security Services, Inc.

Sterling Infosystems, Inc. $74.0 1.5x N/A

Provides background screening services through legally compliant reports including criminal record checks, fingerprinting, drug testing, credit reports and verification services, and driving records

Nov-11Batrus Hollweg International Selection Services, Limited

Kenexa Corp. (NYSE:KNXA) $11.5 N/A N/A

Operates as a human capital consulting company developing talent gauging systems - tools to assess and develop individuals within a company

Oct-11 The RightThing, Inc.

Automatic Data Processing, Inc. (NasdaqGS:ADP) N/A N/A N/A

Provides recruitment process outsourcing solutions offering insight into trends, best-practices, metrics, and research through white papers, articles, webinars, blog entries, and speaking events

Sep-11 Tandem Select

Sterling Infosystems, Inc. N/A N/A N/A Provides pre-employment background checking and screening services Sep-11 Censeo Corporation

Mercer LLC N/A N/A N/A

Engages in the design and delivery of online employee assessment platforms in the areas of online testing, 360 degree feedback, employee surveys, and skill simulation assessment

May-11Public Data Works, Inc.

FirstPoint Energy Corporation N.A. N/A N/A N/A

Offers applicant tracking, criminal records, education and employment history checks, tenant screening, public records, monitoring, DNA testing, and student background checking services

May-11Advantec, Inc.

Oasis Outsourcing, Inc. N/A N/A N/A

Offers a range of human resources, payroll processing, benefits, and risk management solutions to small- and medium-sized business

Jan-11 PreVisor Inc.

SHL Group Limited N/A N/A N/A Provides on demand employee assessment solutions HR Administrative & Outsourcing Services Mean $36.3 1.5x N/A

(5)

Select HRO M&A Transactions (cont.)

Although strategic acquirers have dominated the HRO M&A landscape, private equity firms have been active investors in the

HRO space. Select transactions in the first quarter of 2012 include: (i) High Street Capital and Cohesive Capital Partners

invested in The TLC Companies, the nation’s largest provider of outsourced human resources services for the transportation

industry (04/2012); (ii) SilkRoad Technology, a provider of cloud-based talent management solutions raised approximately $35

million in its latest round of financing (03/2012); (iii) Sverica invested in The Bartech Group, a workforce management and

staffing firm (03/2012); (iv) Susquehanna Growth invested approximately $36 million in iCIMS, Inc., a provider of web-based

recruitment and hiring software (01/2012) and (v) Mayfield fund invested $25 million in BranchOut (bringing total funding to

$49 million), a technology company that provides a Facebook to enable users to find jobs through their Facebook relationships.

($ in millions)

HR Technology

Mar-12Sonar Limited

Cornerstone OnDemand, Inc. (NasdaqGS:CSOD) $14.0 N/A N/A Designs and develops online performance management and succession planning software solutions Feb-12 Taleo Corp. (NasdaqGS:TLEO)

Oracle Corporation (NasdaqGS:ORCL) $1,921.4 5.7x 60.9x

Provides on-demand talent management software solutions primarily on a subscription basis through its direct sales force and strategic partners

Jan-12 WorkforceLogic LLC

APC Workforce Solutions, LLC (ZeroChaos, Inc.) N/A N/A N/A

Offers vendor management software, managed services programs, vendor management solutions, compliance, risk management, payroll services, statement of work, and business intelligence Dec-11 Teledata Communications, Inc., Screening Assets

SS&C Technologies Holdings, Inc. (NasdaqGS:SSNC) N/A N/A N/A Provides background search and credit retrieval software-as-a-service suite Dec-11 Jobs2Web, Inc.

SuccessFactors, Inc. (NYSE:SFSF) $110.0 N/A N/A

An interactive recruitment marketing company that provides interactive recruiting and career site optimization solutions

Dec-11 SuccessFactors, Inc. (NYSE:SFSF)

SAP America, Inc. (DB:SAP) $3,764.4 12.0x NM Provides cloud-based human resources management software solutions and talent management solutions Oct-11 The RightThing, Inc.

Automatic Data Processing, Inc. (NasdaqGS:ADP) N/A N/A N/A

Provides recruitment process outsourcing solutions offering insight into trends, best-practices, metrics, and research through white papers, articles, webinars, blog entries, and speaking events

Oct-11 ADI Time LLC

Asure Software, Inc. (NasdaqCM:ASUR) $7.1 1.5x 128.4x

Develops cloud computing time and attendance management software-as-a-service for small-to-mid-sized businesses and divisions of large enterprises

Oct-11 Provade, Inc.

Pinnacle Technical Resources, Inc. N/A N/A N/A Provides enterprise vendor management system for contingent workforce and services procurement Aug-11Raet B.V.

CVC Capital Partners Ltd. $575.9 3.0x N/A

Provides information technology solutions in the field of human resources and payroll services in the Netherlands

Aug-11Ashbourne Assessment Systems Ltd.

Kenexa Corp. (NYSE:KNXA) N/A N/A N/A

Supplies attraction campaigns, and selection and development programmes for managers, senior leaders, and executives in the United Kingdom

Jun-11 Jobpartners plc.

Taleo Corp. (NasdaqGS:TLEO) $37.4 N/A N/A Provides talent management software solutions worldwide Jun-11 GlobalExpense Limited

Concur Technologies, Inc. (NasdaqGS:CNQR) $23.0 N/A N/A

Provides expense management software solutions for employee travel and entertaining expense management for companies

Jun-11 Xi'an Fesco

ManpowerGroup (NYSE:MAN) N/A N/A N/A Provides human resource services in China’s Shaanxi province to the manufacturing sector Jun-11 CyberShift, Inc.

SumTotal Systems, Inc. N/A N/A N/A Provides workforce management and expense management solutions and services May-11JobsCentral Pte Ltd.

CareerBuilder Inc. N/A N/A N/A Provides jobs, education, scholarships, and career information and applications in Singapore May-11ePlan Services, Inc

Paychex, Inc. (NasdaqGS:PAYX) $15.2 N/A N/A

Provides outsource solutions for the design, provision, and management of employer-sponsored retirement plans in the defined contribution industry

May-11Principal Decision Systems International, Inc.

Kronos Incorporated N/A N/A N/A A software development company, focusing on the development of workforce scheduling software Apr-11 Cytiva Software Inc.

Taleo Corp. (NasdaqGS:TLEO) $11.9 1.7x NM

Provides on-demand integrated talent management software solutions for the small, mid, and large corporations

Mar-11Jambok, Inc.

SuccessFactors, Inc. $9.8 N/A N/A

Operates a social business platform that enables employees to create content and share it with others as part of a community

Jan-11 GeoLearning, Inc.

SumTotal Systems, Inc. N/A N/A N/A

Provides managed services and on-demand learning management software as on-demand software as a service

Jan-11 HumanConcepts, LLC (OrgPlus)

Insperity, Inc. (NYSE:NSP) $12.0 N/A N/A

Provides software solutions to enterprises to manage organizational changes of growth, rightsizing, and reorganization

HR Technology Mean $541.8 4.8x 94.7x HR Technology Median $19.1 3.0x 94.7x

(6)

Select HRO M&A Transactions (cont.)

Concluding Thoughts

Even with an uncertain economy, HRO providers are positioned to experience growth. Expanding offerings and SaaS models

are driving growth as well as M&A activity. With an improved outlook, valuations across all segments are strong. HR

technology companies have received premium valuations with buyers valuing the recurring revenue stream and embedded

customer base. We expect strong multiples to remain as strategic buyers have dominated the transaction landscape.

($ in millions)

Staffing & Executive Search

Mar-12MSN HomeCare Division

Epic Health Services, Inc. N/A N/A N/A Provides healthcare services to the acute and non-acute healthcare organizations Mar-12Apex Systems, Inc.

On Assignment Inc. (NasdaqGS:ASGN) $693.7 1.0x 14.3x

Engages in recruiting and placing information technology professionals for contract, contract- to- hire, and direct placements

Jan-12 PHS Staffing, Inc.

Advantage RN, LLC N/A N/A N/A

A medical staffing agency that specializes in placing qualified healthcare providers in nursing jobs on a per diem, contract, temp-to-perm, travel, or direct-hire basis in a wide range of health care positions Jan-12 OptiLink Inc.

Kronos Incorporated N/A N/A N/A

Engages in the development and distribution of patient classification and staffing computer software used in the health care industry to measure organizational performance

Jan-12 VSN, Inc.

Adecco S.A. (SWX:ADEN) $117.6 N/A N/A

Provides human resource services in Japan including engineer dispatching services, contract and paid placement services, and human resource dispatching services to various production companies Jan-12 Advantage Resourcing America & Europe

Recruit Co., Ltd. $410.0 0.3x N/A

Offers information technology and engineering, manufacturing, administrative, and financial executives staffing services as well as executive placements, payroll, and project outsourcing solutions

Nov-11TS Staffing Services, Inc.

Corporate Resource Services, Inc. (OTCBB:CRRS) $81.6 0.4x 15.4x Offers temporary employment staffing services in the areas of light industrial and administrative support Oct-11 Staffmark Holdings, Inc.

Recruit Co., Ltd. $295.0 0.3x 8.2x

Provides various staffing services and direct hire services including sourcing and screening candidates to small and middle-market companies

Sep-11 Peoplelink Staffing Solutions, LLC

Groupe CRIT SA (ENXTPA:CEN) N/A N/A N/A

Offers temporary, temp-to-direct, contract, direct, payroll, onsite outsourcing, and recruitment process outsourcing staffing solutions, as well as managed staffing and onsite services

Aug-11Healthcare Partners, Inc.

On Assignment Inc. (NasdaqGS:ASGN) $19.4 N/A N/A

Operates as a physician and healthcare recruitment company offering physician, nurse practitioner, and physician assistant staffing services for various specialties

Jul-11 Drake Beam Morin, Inc.

Adecco S.A. (SWX:ADEN) $216.1 1.8x N/A Provides career transition and talent development solutions to individuals and organizations Jul-11 A-1 Temps, Inc.

Nesco Resources N/A N/A N/A

Provides staffing services in Florida specifically, recruiting, advertising, interviewing, screening, and testing of applicants as well as recruiting services on a temporary and temp-to-hire or project basis

Jul-11 SFN Group, Inc. (NYSE:SFN)

Randstad North America, L.P. (AMS:RAND) $742.9 0.4x 10.3x

Offers professional and staffing services, which include temporary staffing, outsourcing and other, and permanent placement services

Jul-11 Rocket Careers, Inc.

Bench International Search, Inc. N/A N/A N/A Provides direct hire services to biotech, pharmaceutical, and medical device companies in California Jul-11 Reynolds Technical Services Inc.

NESCO, Inc. N/A N/A N/A Provides technical staffing services Jun-11 REACH HR

ManpowerGroup (NYSE:MAN) N/A N/A N/A

Operates as a human resource company which engages in the temporary employee placement services catering to electrical appliance and logistics industries

Apr-11 Edge Professional Services, Llc

Artech Information Systems LLC N/A N/A N/A Operates as a technical and information technology staff augmentation company Apr-11 Cameo Personnel Systems, Inc.

Diamond Staffing Services, Inc. $0.8 0.1x N/A

Provides temporary staffing, direct hire placement, and temporary to hire staffing services. It offers candidate searching, skills testing, reference checking, criminal background and motor vehicle checking Mar-11Periscope Recruitment LLP

Aspire Global Network N/A N/A N/A

Operates as a boutique recruitment consultancy for the creative industry, providing permanent, contract, and freelance placement services

Feb-11 PRN Registry, Inc.

SK3 Group Inc. (OTCPK:SKTO) N/A N/A N/A Provides healthcare staffing solutions to healthcare facilities in California Jan-11 EnviroTemps, Inc.

Cherokee Nation Businesses, L.L.C. N/A N/A N/A Provides technical support services for government and industries Jan-11 Full Circle Staffing

Nesco Resource N/A N/A N/A Provides engineering and IT staffing services Jan-11 Tri-Diamond Staffing, Inc.

Corporate Resource Services, Inc. (OTCBB:CRRS) $38.2 0.4x 12.8x Offers temporary and permanent employment staffing services Staffing & Recruiting Services Mean $261.5 0.6x 12.2x

Staffing & Recruiting Services Median $166.9 0.4x 12.8x Aggregate Mean $369.1 2.2x 35.8x Aggregate Median $38.2 1.3x 14.3x

(7)

Select Publicly-Traded Comparable Companies

($ in millions, except per share data)

Financial Data

Enterprise Value /

% of 52

Market

Enterprise

LTM

Gross

Revenues

EBITDA

Company

Week High

Cap

Value

Revenue

Margin

LTM

CY12E

CY13E

LTM

CY12E

CY13E

HR Administrative & Outsourcing Services

Automatic Data Processing, Inc.

97.4%

$27,276

$25,957

$10,350

49.7%

2.47x

2.35x

2.18x

11.6x

11.0x

10.0x

Barrett Business Services Inc.

97.5%

206

140

315 13.8%

0.41x

0.08x

0.07x

24.7x

8.5x

6.7x

Capita PLC

93.3%

6,964

9,588

2,930

28.5%

2.09x

1.86x

1.73x

12.3x

11.1x

10.5x

Huron Consulting Group Inc.

92.1%

777

966

606 38.0%

1.58x

1.47x

1.32x

8.6x

7.9x

6.8x

Insperity, Inc.

93.0%

783

515 1,976

17.8%

0.25x

0.23x

0.21x

6.8x

5.5x

4.8x

Paychex, Inc.

93.6%

11,438

10,935

2,201

69.2%

4.87x

4.75x

4.44x

11.4x

11.2x

10.2x

Towers Watson & Co.

96.0%

4,556

4,317

3,407

32.2%

1.21x

1.22x

1.17x

6.5x

6.2x

5.7x

Xchanging PLC

83.5%

365

338

651 9.5%

0.33x

0.31x

3.1x

2.7x

2.6x

Mean

93.3%

32.3%

1.65x

1.53x

1.43x

10.6x

8.0x

7.2x

Median

93.4%

30.4%

1.40x

1.35x

1.24x

10.0x

8.2x

6.7x

HR Technology

Job Site

51job Inc.

89.2%

$1,774

$1,449

$1,300

71.5%

6.49x

5.73x

4.75x

18.0x

15.6x

12.2x

Dice Holdings, Inc.

50.5%

606

561

179 92.7%

3.16x

2.85x

2.57x

7.8x

7.2x

6.3x

Monster Worldwide, Inc.

50.8%

1,155

1,093

1,040

50.4%

0.96x

1.11x

1.06x

7.3x

6.6x

5.7x

Software as a Service

Callidus Software Inc.

92.1%

$263

$271

$84

41.1%

3.13x

2.79x

2.41x

NM

42.1x

21.3x

Concur Technologies, Inc.

89.9%

3,069

2,843

370 71.6%

7.57x

6.12x

4.93x

68.7x

26.4x

20.3x

Kenexa Corp.

91.0%

824

741

283 60.4%

2.64x

2.07x

1.81x

31.1x

13.0x

10.6x

LinkedIn Corporation

80.9%

10,165

9,587

522 84.4%

18.72x

11.14x

7.42x

NM

56.3x

32.8x

Personal & Informatik AG (P&I)

100.0%

284

264

70 69.3%

2.85x

2.65x

2.48x

10.0x

NM

Saba Software, Inc.

75.8%

296

282

121 62.9%

2.29x

1.99x

NM

59.4x

NM

The Ultimate Software Group, Inc.

96.6%

1,911

1,862

269 56.8%

6.87x

5.63x

4.65x

69.4x

30.2x

22.3x

Mean

81.7%

66.1%

5.47x

4.21x

3.56x

30.3x

28.5x

16.4x

Median

89.6%

66.1%

3.14x

2.82x

2.57x

18.0x

26.4x

16.3x

Staffing & Executive Search

Diversified Staffing

Adecco S.A.

73.5%

$9,451

$10,603

$20,545

17.4%

0.38x

0.39x

0.37x

8.4x

8.3x

7.5x

Hays plc

68.7%

1,807

2,088

3,543

8.8%

0.39x

0.36x

0.34x

9.5x

9.1x

8.0x

Hudson Highland Group Inc.

74.8%

156

123

934 37.9%

0.15x

0.13x

5.8x

5.1x

3.6x

Kelly Services, Inc.

71.9%

563

579 5,551

16.1%

0.10x

5.9x

4.6x

4.1x

ManpowerGroup

66.4%

3,705

3,825

22,006

16.8%

0.16x

0.18x

0.17x

5.5x

6.2x

5.3x

Michael Page International plc

82.6%

2,288

2,196

1,019

54.3%

1.25x

1.31x

1.19x

13.1x

14.7x

11.7x

Randstad Holding NV

67.7%

5,993

7,693

16,225

18.2%

0.35x

0.34x

0.33x

9.3x

8.1x

7.2x

TrueBlue, Inc.

95.0%

669

560 1,316

26.4%

0.41x

0.39x

0.37x

8.4x

7.2x

6.2x

Specialty Staffing

AMN Healthcare Services Inc.

66.5%

$252

$481

$887

28.1%

0.54x

0.51x

0.48x

8.8x

7.4x

6.3x

CDI Corp.

97.3%

347

325 1,060

21.3%

0.30x

0.29x

0.27x

8.1x

7.6x

6.4x

Cross Country Healthcare, Inc.

64.0%

160

190

504 27.4%

0.35x

0.36x

0.34x

8.5x

7.8x

6.7x

Kforce Inc.

82.2%

522

572 1,111

31.2%

0.50x

0.49x

0.46x

9.6x

8.5x

7.1x

On Assignment Inc.

97.7%

695

765

597 33.5%

1.21x

1.12x

1.05x

13.6x

12.0x

10.8x

Resources Connection Inc.

88.2%

592

471

572 37.8%

0.75x

0.80x

0.76x

9.8x

9.4x

7.7x

Robert Half International Inc.

93.6%

4,227

3,950

3,777

39.4%

1.02x

0.96x

0.88x

12.8x

10.2x

8.7x

Team Health Holdings, Inc.

85.1%

1,351

1,761

3,142

55.0%

0.56x

0.90x

0.82x

10.0x

8.6x

7.7x

Executive Search

CTPartners

48.3%

$49

$28

$121

18.9%

0.19x

0.21x

0.20x

NM

4.0x

3.3x

Heidrick & Struggles International Inc.

78.1%

395

210

528 29.4%

0.37x

0.40x

0.37x

4.7x

4.2x

3.7x

Korn/Ferry International

68.5%

786

525

790 33.1%

0.64x

0.59x

4.6x

5.7x

4.8x

Mean

77.4%

29.0%

0.51x

0.52x

0.48x

8.7x

7.8x

6.7x

Median

74.8%

28.1%

0.39x

0.37x

8.7x

7.8x

6.7x

Aggregate Mean

82.0%

39.8%

2.09x

1.74x

1.46x

13.7x

13.0x

9.0x

Aggregate Median

85.1%

33.5%

0.75x

0.90x

0.79x

9.3x

8.4x

7.1x

Source: S&P Ca pi ta l IQ, SEC Compa ny Fi l i ngs , Hi ghBa nk Res ea rch Al l Ma rket Da ta a s of: Ma rch 31, 2012

(8)

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[email protected]

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