貝恩人力資源51net盡職調(diào)查報告001

1、bc investment due diligence assessment 23 december 1999 bc sng 2z5112osf disclaimer the investment opportunity described below has not been recommended or approved by bain sg cowen securities; analyst reports; company websites is a china-based start-up company established in 1998 focused on the onli

2、ne recruitment market its key partner team includes 1 bain partner (rick yan) and 3 former bain consultants is seeking to raise us$3m in exchange for a 5% equity stake in the business underlying china online recruiting market growth and penetration (included in business plan targets) adjacent e-busi

3、ness opportunities (not included in business plan targets) has a click-and-mortar business model for job placements, consisting of a newspaper, career post weekly, launched in oct 1998 a website, , launched in jan 1999 it is currently one of the leading players in each of the high-end multinational

4、recruitment advertising markets of beijing, shanghai and guangzhou 500,000 readership relationship with 5,000 hr managers resume bank has 50,000 subscribers (highly educated professionals and middle managers: relatively affluent, highly paid customer base) is targeting growth through a combination o

5、f initiatives: growth of core online recruiting business in existing and new city markets embarking on adjacent e-business opportunities to serve its core affluent customer base (ebay, business models for china) developing into an umbrella brand with a strong portfolio of vertical applications estab

6、lishing an e-commerce business incubator background strategy and business model investment upside china-specific legal and regulatory risk intrinsically low entry barriers speed in reaching scale key risks investment overview bc sng 6z5112osf bain role business plan developmentaccountingadvisory boa

7、rd recruiting supportcreativeseed funding temporary management technicalfundraising support legalfacilities/spacestrategic partner introductions criteria market potential business concept leadership opportunity team bain value added bain learning bain compensation company: proposed terms: to invest

8、us$0.5m in exchange for 0.83% equity stake in company required resources: overview see attached recommendation see attached current investors: contact/principals: rick yan x x scoring 4 4 4 4 2.5 2 3.5 comments chinas internet growth potential is very high given its current embryonic stage (internet

9、 penetration from 4% in 1998 to 16.5% in 2002) in the us, the online recruiting market is one of the most successful b2c business models (us$265m market revenue in 1999) in china, the online recruiting market is in early stages but the underlying potential is high (opportunity to improve currently i

10、nefficient recruiting processes/channels) unique click-and-mortar business model with newspaper and online media opportunity to leverage employer and job seeker customer base into adjacent business opportunities is currently #1 or #2 in beijing (0.7 rms), shanghai (5.5 rms) and guangzhou (0.3 rms) n

11、o competitor has locked up exclusive relationships with leading china portals the senior management team has had several years work experience in china with bain uncharted space can this company/idea become the market leader? does it have or could it establish proprietary advantages? leadership oppo

12、rtunity 1 - 2 - 3 - 4 -5 struggle to hire team in place are there high quality team members involved? are there resources to go make it happen? team 1 - 2 - 3 - 4 - 5 traditional consulting transformational impact can bain shape the destiny of this company? bain value added will bain gain valuable e

13、xperience from this investment? bain learning 1 - 2 - 3 - 4 - 5 passive investment awesome learning opportunity platform deal will bain be fairly compensated for investments and risks? bain compensation1 - 2 - 3 - 4 - 5 npv = opportunity cost chance to make $25m+ executive summary screening criteria

14、 bc sng 8z5112osf executive summary hybrid vs. pure online play the hybrid click-and-mortar business model has several advantages over the pure online plays. description: increased certainty of earnings more stable and certain earnings stream from newspaper business dampens the more volatile and unc

15、ertain earnings from the online business barriers to entry higher for newspaper business greater customer penetration increased access to customers complementary distribution channels joint branding strategy improves customer recall higher overall profitability unlike pure online models, the newspap

16、er business is profitable 48% operating margin for career post (driven by 5% marketing/sales spend) negative operating margins for (driven by 203% marketing/sales spend) bc sng 9z5112osf business plan targets total costs: us$4.4mus$7.4mus$11.1m operating profit:(us$0.2m)us$2.0mus$1.8m operating marg

17、in:(3.8%)21.7%13.7% ebitda:(us$0.3m)us$2.0mus$1.8m non- recruitment* career post cagr (00-02) 150% 50% source: private placement memorandum revenue (us$m) 0 2 4 6 8 10 12 14 2000f (bain forecast) 2000f (business plan) 2001f (bain forecast) 2001f (business plan) 2002f (bain forecast) 2002f (business

18、plan) executive summary s revenue targets are realistic, based on an evaluation of us benchmark comparables and an assessment of business plan targets - new adjacent business opportunities are not forecasted to contribute materially to 2000-2002 financials. $4.1m $4.2m $8.8m $9.4m $11.6m $12.8m *inc

19、ludes all adjacent business opportunities (, , incubator) bc sng 10z5112osf cy 929x 459x 0 200 400 600 800 1,000 x career p (blended multiple) h headh careerb 6x 38x 13x 71x 21x 11x 0 20 40 60 80 x us and china valuation benchmarks s overall valuation multiple is roughly in line with us online only

20、recruitment benchmarks, although a standalone valuation multiple (more apples to apples) is relatively high. however, s valuation multiple is considerably lower than that of c, the only nasdaq listed china internet benchmark. executive summary note: price-to-sales multiple for career post, and based

21、 on year 2000 projections (price is pre-money valuation); all other price-to-sales multiples based on december 10, 1999 market capitalization and 1999 forecast revenue (q1-3 actual, q4 forecast) source: company financials; private placement memorandum online recruitment price-to-sales multiplesinter

22、net portal multiple (china vs. us) price-to- sales multiple price-to- sales multiple market capitalisation:$1,141m$146m$150m revenue:$16m$7m$14m bc sng 11z5112osf investment risks executive summary china internet regulatory risk currently, regulations on foreign internet participation in china are u

23、nclear officially, up to 49% foreign ownership is allowed but active foreign operating involvement is prohibited unofficially, significant foreign operating involvement is already in place in many e-business ventures impact of wto should be positive, but initial mii reactions have not been positive

24、under wto, up to 49% foreign ownership and active foreign operating involvement is allowed however, minister wu of mii has advocated a clampdown of foreign participation without specific details several ministries aiming to control internet regulations with the ministry of information and industry (

25、mii) emerging as the leading regulator partners are comfortable with china risks based on multiple discussions with senior government officials chinese title law not well developed physical and intellectual property not well protected intrinsically low entry barriers potential entry by internet port

26、als or online newspaper (in classified section) low capital investments required subscriber base already established however, career post business has higher entry barriers speed in reaching scale trading off short-term profitability for long-term market dominance high customer acquisition cost abil

27、ity to lock up alliances with major portals ahead of competitors the investment in is not without risks. standard operating risks bc sng 12z5112osf pre and post-money valuation valuationadjusted bain valuation (base case) adjusted bain valuation (low case) $60m $43m $39m 0 20 40 us$ 60m market capit

28、alization (us$ m) post money value added pre money valuation $36m $57m 2000 sales: $4.25m $4.1m $4.1m blended price-to-sales multiple*: 13.4x 9.5x 8.5x price-to-sales multiple:38x16x11x source: private placement memorandum; bain analysis note: price-to-sales blended multiple based on varying price-t

29、o-sales multiples of pre-money: 8.3% post money: 7.7% pre-money: 5.3% post money: 5.0% $3m investment being raised executive summary pre-money: 7.5% post money: 6.9% *price-to-sales multiple based on year 2000 projections $40m s valuation is on the high end, driven by the high price-to-sales multipl

30、e of its online recruitment business. bc sng 13z5112osf potential returns low case: post-money valuation us$60m year 2002 valuation revenue us$7.85m from career post us$4.82m from price-to-sales multiple 4x for career post 20 x for 3 year return 2.2x assumptionsvaluationreturn on moneyirr 29%us$130m

31、 the expected returns are attractive but not blockbuster. executive summary base case: us$60m3.8x57%us$230mrevenue us$7.85m from career post us$4.82m from price-to-sales multiple 6x for career post 38x for high case: us$60m7.9x99%us$475mrevenue us$7.85m from career post us$4.82m from us$6m from adja

32、cent e-businesses price-to-sales multiple 6x for career post 38x for 38x for adjacent e-businesses bc sng 14z5112osf agenda executive summary detailed business assessment us market benchmarks china market dynamics financials bc sng 15z5112osf us internet penetration and online recruitment forecast (

33、1998-2002f) us market benchmarks the us online recruiting market is projected to be us$1b in 2002. source: idc; goldman sachs research; euromonitor; forrester research; bain estimates internet penetration online recruiting spend 19981999e2000e2001e2002e 0 10 20 30 40 45% 0 250 500 750 1,000 us$ 1,25

34、0m internet penetration (%) online recruiting spend (us$ m) online recruiting spend cagr (1998-2002e) 79% bc sng 16z5112osf pricing models: us markets source: competitor websites; industry analyst reports; interbiznet; forrester research; bain analysis most of the leading online job search sites in

35、the us offer high margin job board services, accounting for the bulk of online recruitment revenues. us market benchmarks description: estimated market size (1998): key players: job board recruiters are charged for each job posted on recruiting site/ network us$85m m careerb c h d c w subscription r

36、ecruiters are charged a flat fee per time period for posting jobs on recruiting site/network us$16m h r upgrade recruiters are charged an upgrade premium so that they can increase the exposure of their jobs (listed at the front of any search) us$5m headh *based on 1998 financials typical pricing:$20

37、-200 per job per month (average of $100 per job per month) $1,000 per year for unlimited job postings $25-$75 premium per job per month typical gross margin*:75%85%98% basic chargesadditional charges target pricing model of bc sng 17z5112osf us online recruitment examples *as of 10 december 1999 tar

38、geting profitable customers and having a strong market position are key to the success of online recruitment businesses in the us. us market benchmarks target market: market position: h #1 choice for corporate recruiters 100,000 job postings 2,520 clients headh #1 site among individuals in the $75k-

39、$100k annual income bracket #3 player in mass market online recruitment 175,000 job postings 1,104 clients careerb mass market recruiting #5 player in mass market online recruitment 100,000 job postings 870 clients gross margin 1999 revenue/client sales and marketing spend/revenue 85% us$4,800 88% 9

40、8% us$4,800 245% 75% us$13,908 182% financial measures (1999): valuation: (price-to-sales multiple*) 71x21x11x partnerships:noneprovides content to strategic partners such as peopleweb communications and partnership with microsoft to launch career channel on msn; agreement with several lycos network

41、 members gross margin 1999 revenue/client sales and marketing spend/revenue source: competitor websites; industry analyst reports; company financials bc sng 18z5112osf recruitment business value chain for corporate customer: for job seeker: customer acquisition develop network of corporate customers

42、 build strong relationships with hr managers build resume database matchmaking advertise quality of resume database advertise quality of corporate customers tie up with internet portals/newspapers servicing expand product and service offering hr website management executive search expand product and

43、 service offering job seeker virtual community career development information services wallet deepening customer loyalty programs adjacent business opportunities customer loyalty programs adjacent business opportunities activities: relationship management increasing differentiation and barriers to e

44、ntry us market benchmarks having access to a resume database and matchmaking job seekers with corporates are only the first steps in the online recruitment business value chain. benefits:increased number of job postings increased number of job postings increased customer loyalty increased job seeker

45、 churn increased customer loyalty increased revenue/ customer and key china competitors current capabilities source: literature searches bc sng 19z5112osf key success factors description: performance measures: examples: high employer retention high number of repeat customers (employers) using servic

46、es from year to year strong relationships with recruiters and job hunters percentage repeat customers revenues/customer h quality resume database effectively maintain and leverage high quality job-seeker resume base, providing for the best recruitment results for both employers and job-seekers numbe

47、r of reputable corporate customers percentage successful placements h headh exclusive partnerships agreement with portals and/or business sites to be the exclusive provider/advertiser of job search products and services number of eyeballs number of job postings careerb m headh us market benchmarks t

48、he success of online recruitment has been attributed to three key success factors. bc sng 20z5112osf agenda executive summary detailed business assessment us market benchmarks china market dynamics financials bc sng 21z5112osf internet penetration online recruiting spend 19981999e2000e2001e2002e 0 1

49、0 20 30 40 45% 0 250 500 750 1,000 us$ 1,250m internet penetration online recruiting spend 19981999e2000e2001e2002e 0 5 10 15 20% 0 5 10 15 20 25 30 us$ 35m source: idc; goldman sachs research; euromonitor; forrester research; bain estimates internet penetration (%) online recruiting spend (us$ m) i

50、nternet penetration (%) online recruiting spend (us$ m) online recruiting spend cagr (1998-2002e) online recruiting spend cagr (1998-2002e) 79% 104% us marketchina major cities (beijing, shanghai and guangzhou) china market dynamics us and china internet penetration and online recruiting forecast (1

51、998-2002f) the china online recruiting market is projected to be us$25m in 2002, a fraction of the us market size. based on business plan projections, this implies a 20% market share for bc sng 22z5112osf above 60 51-60 41-50 36-40 31-35 26-30 21-25 16-20 under 16 others sichuan zhejiang jiangsu sha

52、nghai guangdong beijing ph.d. masters undergraduate junior college high school below high school by ageby regionby education background 4m4m4m 0 20 40 60 80 100% percent of total users internet user segmentation source: cnnic report china market dynamics s target customer segments s online recruitin

53、g business model is targeting the majority of chinas internet users. bc sng 23z5112osf recruitment website characteristics source: website search type job agency website there are 3 types of recruitment websites in china. characteristicsno. of websitesexample hr website classified advertisement recr

54、uitment is main content privately owned company mainly managerial, technical jobs provide job opportunities in big cities some are related to the head hunters recruitment is main content sponsored by government non-profit organization low profile job recruitment service personnel document management

55、 service included focus on regional labor market internet content provider recruiting is minor portion of their content business website, local city website and industry website are included z www.work-job.com (xian talent market) job.iii- (wuxi talent market) (northern china talent market) 48 58 ch

56、ina market dynamics bc sng 24z5112osf china online recruitment competitor market share by geography (1999) source: private placement memorandum c z china- z china- c c z china- china- z c beijingguangzhoushanghaiother areas 11,16910,2353,7794,668 total = 29,851 0 20 40 60 80 100% total number of job

57、s posted (nov. 23- dec.22, 1999) s relative market share:1.4 is currently the #1 or #2 player in beijing, guangzhou and shanghai. china market dynamics bc sng 25z5112osf online recruitment competitor profiles source: website search china-hr.comzc investor job availability* customer reaction

58、 position provided company served business model partners e-channel management consulting company shenzhen cjol human resources co, ltd managerial, technical staffmanagerial, technical staff 4518 1313 resumes accepted currently, 34067 accepted resumes accumulated managerial, technical staff alliance

59、 consulting ltd. 28304522 59687 registered individuals both foreign companies and local companies, mainly high profile jobs focus on mnc and hi-tech companies 228 companies served 6807 companies registered both local companies and foreign companies combination headhunting website recruitment service job magazine combination website recruitment service headhunting e-commerce combination headhunting website recruitment service job magazine bbs s41 partners including sohu, netease,sina and 263net 12 partners including yahoo china, netease,263net china m