Quarterly Update
INSIDE THIS ISSUE
The First Word: Conference Attendees Bullish
CHILDS Advisory Partners recently hosted the 5th annual CHILDS Conference in Atlanta on May
1st. It was our best event yet with over 250 people attending, including over 70 private equity
professionals.
Our keynote speaker, Mike Ettling (CEO of SAP HR), addressed the global trends in both HR tech
and cloud computing. Mike’s perspective was especially enlightening due to the recent trend
toward SaaS that is impacting every category of both the software and services industries. SAP’s
acquisition of Fieldglass is a great example of the increasing importance of this space.
We were also lucky enough to have Sandra Notardonato from Gartner, Inc. discuss the
worldwide growth of end-user IT spending and the drivers of growth for the transforming IT
landscape. Clearly, there is a shift within IT spending towards more marketing and specialized
strategy influence as social media and mobile rule the day on both the B2C and B2B fronts.
Gartner was nice enough to post some its most relevant research on our website for you to
access (CHILDSAdvisoryPartners.com).
Ed Lenz, Senior Counsel for the American Staffing Association and one of the foremost
authorities on the Affordable Care Act (“Obamacare”), led a panel on the influence of the new
legislation and its impact to both services and technology firms. Understandably, this event was
standing room only. While Obamacare does present some challenges, it also offers
opportunities for firms in benefits administration and workforce management.
The conference concluded with sportscaster Bill Macatee sharing some great stories from his
experiences working behind the scenes at the Masters and US Open tennis tournament. Not
only is Bill well known from his work in television, but he has also become a very savvy investor.
Besides shameless self-promotion, our objective for the conference is to provide a safe and
candid environment where business owners can meet peers and swap ideas to drive value in
their own businesses. As Steve Covey preaches, “Begin With the End in Mind.” This is great
advice for anyone who has personal or business goals they want to achieve. I am pleased the
day was valuable to all who attended and I am hoping we are able to host an even better event
next spring.
We have closed 8 transactions thus far in 2014, including two in Europe, for our best start ever.
In June, two new Managing Directors join our team along with our latest Analyst class, which
will bring our team of bankers to 25 strong. We expect the positive start to continue through
the rest of 2014 as debt continues to be attractive, private equity continues to be active, and
business results trend positive. Thank you to all of our clients who have trusted us to deliver
superior results for them and their shareholders.
Have a great summer!
Jim Childs
The First Word 1
Selected Transactions 2
Market Update 3
Sector Updates 4
About CHILDS 12
CHILDS News and Events
5/9/14 CHILDS advises iSense on its sale to Manpower 5/2/14 CHILDS advises Vonlay on its sale to Huron Consulting 5/1/14 CHILDS hosts the 5th Annual CHILDS Conference in Atlanta, GA 4/23/14 CHILDS advises Nexus IS on its sale to Dimension Data 4/4/14 CHILDS advises Workforce Insight on its recapitalization by Baird Capital 4/4/14 CHILDS advises Counsel On Call on its recapitalization by Gridiron Capital 2/27/14 CHILDS advises ettain on its recapitalization by New MainStream Capital 2/14/14 CHILDS advises Vistex on its acquisition of Counterpoint Systems 2/4/14 CHILDS advises Vistex on its acquisition of hawkeye Channel 12/20/13 CHILDS advises Symmetry on its recapitalization by Great Hill Partners 12/17/13 CHILDS wins award for 2013 “Corporate/Strategic Acquisition of the Year ($50 - $250 million)” at M&A Advisor Awards Gala CHILDS Advisory Partners 3438 Peachtree Road NE Phipps Tower, Suite 1400 Atlanta, GA 30326 Phone: 404.751.3000 Fax: 404.751.3001 www.childsadvisorypartners.com
1Q 2014
Page | 2
CHILDS Quarterly Update: 1Q 2014
Recent CHILDS Transactions
October 2012
has been recapitalized by
February 2013
has been acquired by
March 2013
has merged with aa subsidiary of
ConversionCapital
August 2013
has been recapitalized by
May 2013
has been acquired by
October 2013
has been acquired by
March 2013
has been recapitalized by
A Portfolio Company of Kayne Anderson
September 2013
has been acquired by
July 2013
has been acquired by
November 2013
has merged with
November 2013
has been acquired by
A portfolio company of Snow Phipps
December 2013
has been recapitalized by
February 2014
has been acquired by
February 2014
has been acquired by
February 2014
has been recapitalized by
April 2014
has been recapitalized by
April 2014
has been recapitalized by
April 2014
has been acquired by
May 2014
has been acquired by
May 2014
has been acquired by
Page | 3
CHILDS Quarterly Update: 1Q 2014
Business Services & Technology Market Update
CHILDS Advisory Partners (“CHILDS”) tracks a list of publicly traded companies in our core sectors. The CHILDS Business Services
& Technology Index has outperformed the S&P 500 Index by approximately 17% over the past year.
Note: The CHILDS Business Services & Technology Index is made up of select public companies in the following sectors: IT/Professional Services, Software, Business
Process Outsourcing, Human Capital Management, Marketing & Information Services and Facilities Services. Index data as of May 15, 2014.
Business Services & Technology M&A Transactions by Quarter (2005 – 1Q 2014)
Business Services & Technology M&A volume was up in 1Q 2014 vs. 4Q 2013 and up year-over-year. We noted a total of 1,384
transactions in 1Q 2014 compared to 1,379 transactions noted in 4Q 2013 and 1,324 in 1Q 2013.
Source: CHILDS database and Capital IQ
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CHILDS Quarterly Update: 1Q 2014
Sector Update: Technology and Professional Services
IT/Professional Services Comparable Public Company Analysis
Public Company Stock Performance Over the past year, the Mid-Market Consulting, VARs/System Integrators, and Federal IT Services indices outperformed the S&P 500 by approximately 19%, 12%, and 2%, respectively. The Managed Services index continues to lag the market, underperforming the S&P by approximately 20%.
Mid-Market Consulting Federal IT Services
The average LTM EBITDA multiple is 10.1x, which is lower than last quarter’s multiple of 10.5x.
The average LTM EBITDA multiple increased to 8.3x in the first quarter, up from 7.7x in the fourth quarter.
Managed Services VARs/System Integrators
The average LTM EBITDA multiple has increased to 11.6x in 1Q 2014 from 9.0x in the fourth quarter.
The average LTM EBITDA multiple is 6.5x, a decrease from last quarter’s multiple of 8.1x.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock prices as of May 15, 2014 in US$.
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Mid-Market Consulting Services Federal IT Services Managed Services VARs/System Integrators S&P 500 Index
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
Ciber, Inc. $4.35 88.6% 0.4x 11.8x
CRA International Inc. $20.40 85.6% 0.6x 6.4x
Edgewater Technology Inc. $7.42 83.6% 0.7x 8.3x
Exponent Inc. $66.72 82.9% 2.6x 11.5x
FTI Consulting, Inc. $29.58 63.3% 1.1x 8.0x
Huron Consulting Group Inc. $65.01 90.7% 2.1x 9.9x
Mattersight Corporation $4.90 62.4% 2.9x NM
Navigant Consulting Inc. $16.54 83.6% 1.3x 8.0x
Perficient Inc. $16.82 69.8% 1.7x 12.9x
Resources Connection Inc. $12.42 77.9% 0.7x 9.2x
Sapient Corp. $17.05 95.0% 1.6x 12.8x
The Hackett Group, Inc. $5.99 80.1% 1.0x 11.4x
Towers Watson & Co. $109.48 83.1% 2.0x 10.9x
Average 80.5% 1.4x 10.1x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
CACI International Inc. $71.60 88.6% 0.8x 8.9x
ICF International Inc. $35.75 80.6% 0.9x 9.4x
ManTech International $29.77 95.1% 0.5x 6.7x
Science Applications International $37.52 93.8% 0.5x 8.1x
Tyler Technologies, Inc. $76.81 71.1% 5.6x 28.8x *
Average 85.9% 1.7x 8.3x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
CenturyLink, Inc. $37.83 99.4% 2.3x 5.8x
Equinix, Inc. $195.92 84.9% 6.1x 14.7x
Internap Network Services Corp. $7.16 78.7% 2.4x 15.6x
Limelight Networks, Inc. $2.07 80.9% 0.5x NM
Rackspace Hosting, Inc. $30.68 56.6% 2.6x 10.0x
Average 80.1% 2.8x 11.6x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
Atos S.A. $82.70 84.3% 0.6x 5.4x
Black Box Corporation $21.79 69.0% 0.5x 7.3x
Cap Gemini S.A. $69.56 87.6% 0.7x 7.8x
Datalink Corporation $8.82 55.7% 0.2x 6.0x
ePlus inc. $49.79 74.3% 0.5x 6.1x
Average 74.2% 0.5x 6.5x
Page | 5
CHILDS Quarterly Update: 1Q 2014
BPO Comparable Public Company Analysis
Public Company Stock Performance In the last twelve months, the Major BPO and Teleservices, and Mid-Market BPO segments have outperformed the S&P 500 by approximately 9%, 7%, and 1%, respectively.
Major BPO Mid-Market BPO
The average LTM EBITDA multiple is 9.8x this quarter, down from last quarter’s multiple of 9.9x.
The average LTM EBITDA multiple is 9.2x this quarter, a decrease from last quarter’s multiple of 10.0x.
Teleservices
The average LTM EBITDA multiple has increased to 8.6x from 7.8x in the fourth quarter of 2013.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock prices as of May 15, 2014 in US$.
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Major BPO Mid-Market BPO Teleservices S&P 500 Index
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
Accenture plc $78.42 91.3% 1.6x 10.5x
CGI Group, Inc. $33.79 88.7% 1.4x 8.9x
Cognizant Technology Solutions Corporation$47.18 87.4% 2.7x 12.7x
Computer Sciences Corporation $61.23 94.6% 0.7x 4.3x
Convergys Corporation $21.81 89.3% 1.2x 9.9x
Genpact Limited $17.17 80.6% 1.8x 9.9x
Infosys Ltd. $55.13 85.0% 3.2x 11.6x
Iron Mountain Inc. $29.60 75.6% 3.2x 11.4x
Pitney Bowes Inc. $25.85 93.7% 2.0x 9.6x
Tata Consultancy Services Limited $36.97 92.0% 5.1x * 16.5x
Unisys Corporation $22.17 61.5% 0.2x 3.2x
Wipro Ltd. $8.70 84.6% 2.6x 11.6x
Xerox Corporation $11.86 93.8% 1.0x 7.7x
Average 86.0% 1.8x 9.8x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
Aditya Birla Nuvo Limited $19.54 89.9% 1.0x 5.9x
Epiq Systems, Inc. $12.41 73.9% 1.6x 10.7x
HCL Technologies Ltd. $23.66 88.4% 3.2x 12.5x
Hexaware Technologies Limited $2.32 76.4% 1.5x 6.7x
iGATE Corporation $35.50 85.7% 2.8x 11.9x
ITC Limited $6.20 96.8% 9.0x * 25.3x *
MphasiS Limited $6.57 76.0% 1.1x 6.3x
Syntel, Inc. $78.13 80.4% 3.2x 9.1x
Tech Mahindra Limited $30.84 94.5% 2.1x 10.3x
Average 84.7% 2.1x 9.2x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
Convergys Corporation $21.81 89.3% 1.2x 9.9x
StarTek, Inc. $6.89 92.1% 0.4x 10.0x
Sykes Enterprises, Incorporated $20.04 86.0% 0.6x 6.4x
TeleTech Holdings Inc. $25.90 95.7% 1.1x 8.1x
Average 90.8% 0.8x 8.6x
Enterprise Value /
Page | 6
CHILDS Quarterly Update: 1Q 2014
IT/Professional Services and BPO Notable Transactions
Date
Closed Buyer Target Target Description/Comment
4/21/2014 Dimension Data Nexus IS National provider of professional, cloud, consulting, and managed services for advanced IT solutions
4/10/2014 Cancom DIDAS Business Services IT services and solutions in the fields of professional, managed, and cloud services
4/08/2014 Baird Capital Workforce Insight Strategic workforce management consulting and implementation services
03/17/2014 ICF International CITYTECH Digital interactive consultancy
03/05/2014 L-3 Communications Data Tactics Provides solutions for data analysis, cloud computing, cybersecurity, research, and software development
03/04/2014 KPMG Synergy Systems Mobility services business and digital experience company
02/27/2014 Cancom HPM Operates as a value-added reseller in the cloud infrastructure environment
02/19/2014 ManTech International Corporation
Allied Technology Group Engineering and information management solutions company
02/17/2014 PricewaterhouseCoopers Mokum Change Management
IT consultancy focused on implementing Oracle applications, managing services and other associated software
02/03/2014 Accenture ClientHouse Independent provider of salesforce.com and Veeva Systems solutions
01/06/2014 Virtusa TradeTech Consulting and IT services provider specializing in treasury and asset management
Page | 7
CHILDS Quarterly Update: 1Q 2014
Software Comparable Public Company Analysis
Public Company Stock Performance Over the last twelve months, the Auto Tech index outperformed the S&P 500 by approximately 11%, while the Engineering and ERP indices matched the market. The Industrial and HR Tech indices underperformed the S&P 500 by approximately 6% and 11%, respectively.
HR Technology Engineering
The average LTM EBITDA multiple this quarter has decreased to 20.7x from 26.6x in the fourth quarter of 2013.
The average LTM EBITDA multiple for 1Q 2014 is 22.9x, down from 30.0x in the fourth quarter of 2013.
Enterprise Resource Planning Automotive OEM and Dealership Systems
The average LTM EBITDA multiple decreased to 12.7x in the first quarter, down from 14.4x in the fourth quarter of 2013.
The average LTM EBITDA multiple this quarter has increased to 22.9x from 19.6x in the fourth quarter of 2013.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock prices as of May 15, 2014 in US$.
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Auto Tech Engineering ERP HR Tech Industrial Automation S&P 500 Index
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
51job Inc. $61.63 71.7% 4.9x 15.3x
Automatic Data Processing, Inc. $76.75 91.6% 3.0x 14.2x
Bond International Software plc $2.18 94.9% 1.5x 16.4x
Callidus Software Inc. $10.31 66.5% 3.9x NM
Cornerstone OnDemand, Inc. $38.52 62.3% 9.6x NM
Dice Holdings, Inc. $6.95 70.5% 2.1x 7.6x
Halogen Software Inc. $8.22 55.7% 2.5x NM
Healthstream Inc. $24.69 62.1% 4.1x 24.2x
LinkedIn Corporation $147.86 57.4% 9.4x 94.4x *
Saba Software, Inc. $9.80 70.5% 0.0x NM
Paychex, Inc. $40.42 88.0% 5.8x 13.2x
Paylocity Holding Corporation $16.41 52.9% 7.2x NM
The Ultimate Software Group, Inc. $117.21 68.2% 7.5x 51.0x
WageWorks, Inc. $37.82 55.4% 4.4x 23.9x
Workday, Inc. $70.69 60.7% 24.8x * NM
Average 68.5% 4.7x 20.7x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
3D Systems Corp. $47.83 49.2% 8.3x 43.0x
Ansys, Inc. $73.71 82.2% 6.8x 14.5x
Aspen Technology, Inc. $44.49 91.9% 10.3x * 34.2x
Autodesk, Inc. $47.82 81.5% 4.1x 24.2x
Aveva Group plc $36.31 81.0% 5.6x 18.9x
Cadence Design Systems Inc. $15.55 95.7% 2.8x 14.4x
Dassault Systemes SA $123.22 87.2% 4.7x 15.7x
ESI Group SA $39.79 98.3% 1.5x 22.3x
Exa Corporation $8.88 54.1% 1.8x 47.7x
Mentor Graphics Corp. $20.18 83.0% 1.9x 9.3x
Nemetschek AG $89.89 97.3% 2.9x 14.0x
PDF Solutions Inc. $18.62 69.7% 4.5x 12.8x
PTC Inc. $34.89 86.4% 3.2x 13.7x
Stratasys Ltd. $88.44 64.0% 7.0x 44.5x
Synopsys Inc. $37.88 91.0% 2.6x 14.0x
The ExOne Company $25.50 32.4% 7.5x NM
Average 77.8% 4.4x 22.9x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
American Software, Inc. $9.04 81.3% 1.9x 11.4x
Concur Technologies, Inc. $79.01 60.6% 6.9x 170.2x *
E2open, Inc. $16.25 54.5% 5.9x NM
Exact Holding NV $36.17 92.6% 2.5x 12.3x
Industrial & Financial Systems IFS AB $29.24 96.5% 1.6x 12.7x
Microsoft Corporation $39.60 95.1% 3.2x 8.2x
NetSuite Inc. $71.78 59.4% 11.8x * NM
Oracle Corporation $41.93 99.4% 4.6x 10.6x
QAD Inc. $19.87 91.8% 0.9x 18.0x
Sage Group plc $6.59 89.2% 3.5x 11.9x
SAP AG $76.14 86.7% 3.9x 11.3x
Selectica, Inc. $6.00 66.7% 1.5x NM
The Descartes Systems Group Inc $12.62 80.7% 5.0x 17.9x
Average 81.1% 3.5x 12.7x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
Autobytel Inc. $11.75 62.4% 1.2x 17.4x
AutoNation Inc. $54.32 96.8% 0.6x 13.3x
AutoZone, Inc. $524.28 93.4% 2.3x 10.5x
Dealertrack Technologies, Inc. $38.66 65.7% 5.0x 50.3x
Equifax Inc. $70.39 96.6% 4.4x 12.5x
Exa Corporation $8.88 54.1% 1.8x 47.7x
LKQ Corp. $28.36 82.6% 1.9x 15.3xSolera Holdings Inc. $65.39 91.9% 6.3x 16.3x
Average 80.4% 2.9x 22.9x
Page | 8
CHILDS Quarterly Update: 1Q 2014
Industrial Automation
The average LTM EBITDA multiple this quarter has decreased to 10.6x, down from 11.0x in the fourth quarter of 2013.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock prices as of May 15, 2014 in US$.
Software Notable Transactions
Date
Closed Buyer Target Target Description/Comment
04/16/2014 GE Healthcare Information Technologies
CHCA Computer Systems Operating room management and analytics solutions provider
04/02/2014 John Wiley & Sons Profiles International Provider of employment assessment and talent management solutions
03/27/2014 SAP Fieldglass Provider of Vendor Management System services deployed in the cloud
02/17/2014 Vistex Counterpoint Systems Software solutions for rights management, royalty processing, and licensing for the music, media, and entertainment industries
02/04/2014 Vistex hawkeye Channel Software solutions that drive channel revenue growth for enterprise marketers
01/28/2014 AOL Project Rover Multi-screen content optimization and personalization
01/23/2014 Demandware Mainstreet Commerce Provider of cloud-based order management solutions
01/23/2014 The Gores Group Zmags Global provider of digital publishing and eCommerce Software-as-a-Service solutions
01/21/2014 Yahoo! Inc. Sparq Mobile marketing service provider
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
ABB Ltd. $23.70 85.0% 1.4x 10.5x
Echelon Corporation $2.42 57.9% 0.7x NM
Honeywell International Inc. $91.16 95.1% 1.9x 11.1x
International Business Machines Corporation$186.46 88.0% 2.3x 8.9x
National Instruments Corporation $27.54 83.6% 2.6x 19.2x *
Rockwell Automation Inc. $119.77 93.2% 2.5x 13.2x
Schneider Electric S.A. $90.61 93.5% 1.7x 10.8x
Siemens Aktiengesellschaft $132.49 95.4% 1.2x 11.0xYokogawa Electric Corp. $12.40 72.1% 0.9x 8.9x
Average 84.9% 1.7x 10.6x
Page | 9
CHILDS Quarterly Update: 1Q 2014
Sector Update: Business Services
HCM Comparable Public Company Analysis
Public Company Stock Performance The HCM segments that we track have outperformed or matched the S&P 500 over the past twelve months. The Search, Commercial/Multi-line, and IT/Professional segments outperformed the market by approximately 48%, 26%, and 12%, respectively. The HRO segments matched the performance of the S&P over the past twelve months.
es
Commercial & Multi-Line Staffing IT & Professional Staffing
The average LTM EBITDA multiple for 1Q 2014 has decreased to 10.5x from 11.9x in the fourth quarter of 2013.
The average LTM EBITDA multiple remained at 10.9x for the first quarter of 2014.
Executive Search HR Outsourcing
The average LTM EBITDA multiple increased to 9.0x this quarter from 7.1x in the fourth quarter of 2013.
The average LTM EBITDA multiple is 10.8x for the first quarter, down from 11.3x in the fourth quarter of 2013.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock price as of May 15, 2014 in US$.
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C/ML IT/Prof Search HRO S&P 500 Index
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
Adecco S.A. $81.21 90.5% 0.6x 12.2x
Kelly Services, Inc. $18.25 69.7% 0.1x 8.9x
ManpowerGroup Inc. $80.17 92.0% 0.3x 8.6x
Randstad Holding NV $55.42 81.0% 0.5x 13.1x
TrueBlue, Inc. $25.55 83.4% 0.5x 10.0x
Average 83.3% 0.4x 10.5x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
CDI Corp. $13.77 71.8% 0.3x 8.4x
Computer Task Group Inc. $15.34 58.8% 0.6x 9.7x
Kforce Inc. $21.59 90.7% 0.7x 13.5x
Mastech Holdings, Inc. $16.82 84.2% 0.7x 12.3x
On Assignment Inc. $35.09 88.0% 1.3x 14.3x
RCM Technologies Inc. $6.20 85.9% 0.4x 7.7x
Robert Half International Inc. $44.54 97.5% 1.4x 12.8x
AMN Healthcare Services Inc. $10.90 67.3% 0.7x 8.3xCross Country Healthcare, Inc. $5.57 48.3% 0.4x 34.1x *
Average 76.9% 0.7x 10.9x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
CTPartners Executive Search Inc. $9.24 76.9% 0.6x 9.7x
Heidrick & Struggles International Inc. $18.19 87.2% 0.6x 7.3x
Korn/Ferry International $28.91 94.0% 1.3x 10.1x
Average 86.0% 0.8x 9.0x
Enterprise Value /
Company Name Stock Price
% of 52 Wk
High
LTM
Revenue
LTM
EBITDA
Automatic Data Processing, Inc. $76.75 91.6% 3.0x 14.2x
Barrett Business Services Inc. $43.24 42.3% 0.4x 8.8x
Capita plc $18.53 94.8% 2.2x 16.4x
Insperity, Inc. $30.56 77.0% 0.2x 7.3x
Paychex, Inc. $40.42 88.0% 5.8x 13.2x
Towers Watson & Co. $109.48 83.1% 2.0x 10.9x
Xchanging PLC $2.59 81.2% 0.4x 4.6x
Average 79.7% 2.0x 10.8x
Page | 10
CHILDS Quarterly Update: 1Q 2014
HCM Notable Transactions
Date
Closed Buyer Target Target Description/Comment
04/18/2014 Addison Group Hire Strategy Professional staffing and consulting
04/04/2014 Gridiron Capital Counsel On Call Provider of legal process outsourcing and managed services to corporations and law firms
04/03/2014 Adcorp Holdings Kelly Group Limited Provider of IT/Staffing solutions
04/01/2014 TZP Group Global Employment Solutions
Offers IT and professional staffing and consulting solutions
03/19/2014 Dice Holdings Oil Careers Oil & gas staffing services
02/27/2014 New MainStream Capital ettain Group Specializes in IT staffing and consulting
02/26/2014 Mitsui The Delta Companies Healthcare staffing firm offering locum tenens and allied staffing services
02/03/2014 Corporate Resource Services
Staff Management Group Commercial and light industrial staffing solutions
01/27/2014 Caymus Equity Hospitality Staffing Solutions
Commercial and light industrial staffing solutions for the hotel and hospitality industry
01/08/2014 IQ Navigator Procure Staff Technologies
VMS solutions for the staffing industry
Page | 11
CHILDS Quarterly Update: 1Q 2014
Facilities Services Comparable Public Company Analysis
Public Company Stock Performance
The Facilities Services and Security Services indices have outperformed the S&P 500 by approximately 8% and 4%, respectively, over the past twelve months.
Facilities Services Security Services
The average LTM EBITDA multiple was 8.8x this quarter, a decrease from 9.5x in 4Q 2013.
The average LTM EBITDA multiple was 9.4x this quarter, an increase from 7.7x in 4Q 2013.
*Excluded from average calculations. LTM = Last Twelve Months. Data obtained from Capital IQ. Stock price as of May 15, 2014 in US$.
Facilities Services Notable Transactions Date
Closed
Buyer
Target
Target Description/Comment
04/22/2014 Stericycle PSC Environmental Services
Recycling, cleaning, and environmental services
03/10/2014 Universal Services of America
Hannon Security Services
Security and guard services
02/28/2014 Interserve Rentokil Initial (Initial Facilities Business)
Facilities services businesses of Rentokil Initial plc
02/11/2014 Pro Park America WinPark Management Parking management and consulting
60
70
80
90
100
110
120
130
140
May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14
Facilities Services Index Securities Services S&P 500 Index
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
ABM Industries Incorporated $26.26 89.0% 0.4x 9.5x
EMCOR Group Inc. $44.39 92.5% 0.5x 9.5x
Fluor Corporation $74.21 88.4% 0.4x 7.5x
Johnson Controls Inc. $44.63 85.0% 0.8x 8.2x
MITIE Group PLC $5.23 90.0% 0.6x 12.4x
Pike Electric Corporation $8.61 64.4% 0.6x 7.3x
Rentokil Initial plc $2.10 93.4% 1.4x * 6.9x
Average 86.1% 0.5x 8.8x
Enterprise Value /
Company Name Stock Price
% of 52
Wk High
LTM
Revenue
LTM
EBITDA
G4S plc $4.29 96.2% 0.8x 15.9x
National Security Group Inc. $10.07 93.7% 0.7x 3.4x
Securitas AB $11.44 94.1% 0.6x 9.0x
Average 94.7% 0.7x 9.4x
Enterprise Value /
Page | 12
CHILDS Quarterly Update: 1Q 2014
About CHILDS Advisory Partners
CHILDS Advisory Partners provides exceptional investment banking services to high-performing business services and technology companies. Our unique combination of global sector focus, process excellence and strength of team allow us to maximize value—and achieve successful outcomes for our clients. Collectively, our senior bankers have executed over 450 M&A and financing transactions. CHILDS is a member of FINRA and SIPC and is a registered broker-dealer.
Our Services
Sell-side Advisory: When you desire to sell or merge your business, we help you prepare, position and execute the process with confidentiality and speed to obtain maximum results.
Buyouts & Recapitalizations: We know the private equity groups interested in the sector and can help you prepare for due diligence and transaction success.
Buy-side Advisory: CHILDS can source deals, qualify them and negotiate them on your behalf. Our sourcing “engine”, market knowledge and experience in creative deal structures will ensure that you see as many deals as possible and have the ability to get them done.
Debt/Equity Capital Raises: We advise companies seeking equity or debt capital for growth, recapitalization or restructuring. CHILDS can help you negotiate with your existing lenders to renew or restructure debt facilities. If needed, we can tap into our many banking relationships to solicit and negotiate term sheets with other potential lenders as well.
Financial & Strategic Advisory: We provide an objective and disciplined methodology to help your team develop a winning plan for short-term performance and long-term value creation. Whether it’s a Value Creation Road Map, Strategic Alternatives Assessment, Employee Stock Ownership Plan, or Fairness Opinion, we provide insight to the options available for company owners to maximize value and liquidity.
Sector Focus
es
Contact Information
Jim Childs Managing Director Phone: (404) 751-3002 Email: [email protected]
Tom Donahue Managing Director Technology & Professional Services Phone: (617) 290-5433 Email: [email protected]
Cooper Mills Managing Director Business Services Phone: (404) 751-3003 Email: [email protected]
Don Holbrook Managing Director Technology & Professional Services Phone: (949) 276-8715 Email: [email protected]
Jimmy Secretarski Managing Director Technology & Professional Services Phone: (404) 751-3005 Email: [email protected]
Ross DeDeyn Managing Director Healthcare Services Phone: (404) 751-3018 Email: [email protected]
Dave Phillips Director Business Services Phone: (904) 292-9305 Email: [email protected]
Alan Bugler Director Business Services Phone: (404) 751-3004 Email: [email protected]
IT/Professional Services
Human Capital Management
Software Facilities Services
Consulting
Managed Services
Federal
VARs/System Integrators
IT Outsourcing
Staffing
Human Resource Outsourcing
Professional Employment Organization
HCM Technology
HCM
Automotive
Engineering
Enterprise Resource Planning
Industrial Automation
Facilities Management
Security
Building & Janitorial
Engineering & Maintenance
Environmental Services
Logistics
Technology & Professional Services
Business Process Outsourcing
Revenue Cycle Management
Legal Process Outsourcing
Teleservices
Knowledge Process Outsourcing
Collections / Receivables
Tech-enabled Business Services
Business Services