Consulting Division: Stax, Inc. University of Notre Dame...
Transcript of Consulting Division: Stax, Inc. University of Notre Dame...
Consulting Division: Stax, Inc. University of Notre DameDecember 2, 2016
SIBC Introduction
§ Largest student-run organization on campus§ Amidst 26th academic year§ Founder: Frank Potenziani
“Peace Through Commerce”
MARKET OVERVIEW
3
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
4
Team Introduction
Team Leaders
Tatiana VdovinaJunior
Finance and German
Brian ChangJunior
Finance and Japanese
Team Members
Michael DavisSophomore
Business and Theology
Shuyi (Elaine) LiFreshmanBusiness
John (Johnny) SullivanSophomore
Accounting, Hesburgh Program in Public Service
Dillon WintzFreshmanBusiness
Yutong YaoSophomore
Science-Business and Economics
5
Executive Summary
Industry • Online job market
Ø Recruitment websites and headhunting/jobhuntingapplications, job boards
Investment type
• Private equityØ Can be implemented by private equity firms and
individual investors
Objectives• Establish a private equity strategy for a potential investor• Develop an LBO model for the acquisition target and make
a recommendation regarding the investment plan
Investment thesis
• Our team suggests Dice (DHI Group) as the current best private equity target
6
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
MARKET OVERVIEW
Sources: IBIS World US
Online Job Market (1/3)
Industry Definition
This industry comprises online establishments engaged in• listing employment vacancies• referring job applicants to potential
employers• assisting companies with employee
recruitment and placement
Key Statistics
Online recruitment market is a growing industry with profit potential.
• Profit(2016): $329.5 million• Enterprises(2016): 3026
Industry Structure
• Life Cycle Stage: Growth• Regulation Level: Medium• Concentration Level: High• Globalization: Low & Increasing• Competition Level: High & Increasing• Barriers to Entry: Medium & Increasing
Industry Outlook in Five Years
Growing industry revenue• Continue growing over the next five years• Growth of annualized 6.9% to $5.2 billionIntensifying Competition• Existing players need differentiation• New players will enterExpansion of services• New online platforms and mobile
applications• Increase product offeringsEconomic & technological development
2684.8
3028.3
3452.2
3701.9
0 1,000 2,000 3,000 4,000
2013
2014
2015
2016
Revenue ($MM)
8Sources: Jobvite, McKinsey & Company report
Online Job Market (2/3)
Efficiencyoptimization
Competitive labor market
Candidates’ high expectation Cost reducing
Digital Revolution
ID Theft
Sensitive information being sold
Crisis of confidence
Fake employers’
posting
Legitimacy of the online
platform
• Data-based decision• Increase in the investment of recruiting
methods• Social media – an essential recruitment tool• Digital revolution - continuously making the
capabilities and potential of the job market evolve
87%55%
47%38%
21%14%13%
3%
Glassdoor
YouTube
Google +
Snapchat
Social Media Used by Recruiters
Emergence Trends
Risk FactorsGrowth Drivers
Sources: IBIS World US
Online Job Market (3/3)
Online recruitment industry has limited product types, great demand, and fierce competition.
Number of broadband connections: 332.1m in 2017• Expected to rise by 10% for next 5 yearsCorporate profit: $1.97t in 2017• Expected to rise by 1.6% for next 5 yearsNational unemployment rate• Expected to fallNumber of temporary employees: 3.44m in 2017• Expected to rise
Finance, 13.1%
Business Administration and Support,
12.5%
Information Technology,
15.8%Healthcare,
21.0%
Manufacturing and Retail,
27.0%
Other, 10.6%
Premier career
services and subscription
s, 57.6%
Advertising and fees,
34.7%
Marketing and sales,
7.7%
LinkedIn Corp.39%
Indeed.com18%
CareerBuilder, Inc.16%
Monster.com11%
Other16%
Product Services Key External Drivers
Demand Determinants Major Companies
MARKET OVERVIEW
10
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
Sources: LinkedIn 2015 10-K
LinkedIn Corp. (1/2)
Business Description
• Operates an online professional network that allow its member to create, manage and share professional identities, build and engage with professional networks, and find business opportunities
• Headquartered in Mountain View, California• Industry Classification:
- Internet Software and Services
Key Statistics (2015)
Offering a wide variety of career-related services, LinkedIn remains a market leader.
Company Timeline
• Talent solutions (63% of net revenue)- hiring solutions for enterprises- learning and development solutions
• Marketing solutions (19%)- advertising products for enterprises - sponsored updates
• Premium subscriptions (18%)- LinkedIn Sales Navigator; LinkedIn
Profinder
Product Lines
Key Items USD in Million Growth/Margin
Net Revenue 2990.9 34.8%
Net Income (loss) (164.8) 92.9%
EBITDA 779.8 31.7%
• Founded in 2002 • Completed a $352.8m IPO in May 2011• Acquisitions:
- mSpoke (2010)- SlideShare (2012)- Alphonso Labs (2013)- Bright Media Corporation & Bizo (2014)- Lynda.com (2015)- Connectifier & Woven (2016)
• Merge: Microsoft Corporation (2016)
12Source: Statista
LinkedIn Corp. (2/2)
Executive Team
Reid HoffmanExecutive Chairman
Co-founder
Jeff WeinerChief Executive Officer
Former Interim President
LinkedIn was co-founded by Reid Hoffman in December
2002 with two former
colleagues from SocialNet
0
50
100
150
200
250
300
350
400
450
500
Total Member Growth (millions)
2002-2010
LinkedIn is foundedIntroduces premium services for generating revenuesAchieves profitability in 2006 (being the first major social network/Web2.0 enterprise to do so)Becomes the most popular site for work-based networkingReaches 70 million users by June 2010
2010-2016
LinkedIn completes an IPOReaches beyond 100 million usersExpands more aggressively internationallyReaches 300 million members in 2013Reaches 400 million members in 2016Gets acquired by Microsoft in June 2016.
Sources: IBIS World US
Monster.com
Monster has struggled recently due to competition and lack of differentiation.
• Market share: 11.1%• Revenue generated through job postings
and database of profiles and resumes for employers
• 2014: $770.1 million in global sales• 56.7% of revenue from US and Canada
• Industry revenue projected to fall 4& in 2016
• Suffered due to sluggish job recovery and competition (i.e. Indeed.com)
• Reduced costs and invested in potential growth areas in response
• Withdrew from Latin America and Turkey and reduced workforce
• Bought out by management and private equity in 2006
• Announced partnership with Twitter to increase ad-based revenue
• Affiliated with 1,000 newspapers• Purchased HotJobs for $225 million• Underwent recent restructuring to compete
more effectively
0
100
200
300
400
500
600
2011 2012 2013 2014 2015 2016
Revenue ($MM) Operating income ($MM)
Overview
U.S. Industry-Specific Revenue
Recent History
Financial Performance
MARKET OVERVIEW
14
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
Sources: Business Insights: Essentials, LexisNexis
Glassdoor.com
Glassdoor is a quickly growing company with high potential, plenty of support, and increased site growth and traffic.
• Evolving Leader (small market share)• Job and recruiting site• Employees and former employees
anonymously review companies and management
• Founded in 2007, launched website in 2008
• Received funding from Benchmark• $3 million, $6.5 million, $12 million,
$50 million• Financing value close to $500 million• Facebook presence has led to 40% of
traffic from international users
• Currently private• Net sales $14.25 million• Acquired JobVent in 2009• Content from 200,000 companies in 190
countries in 2012• Won 2013 Webby Award for Best
Employment Site
Hired Adam C. Spiegel,
former CFO and
investment banker
Hints at taking
company public?
Overview
Future Direction
Recent History
Financial Performance
Sources: 10-K, Yahoo Finance
Dice (DHI Group Inc.)
• Vertical specialization• Global opportunities• Research-oriented• Future development in mobile services &
marketing• Internationally stable: eFinancialCareers
revenue increased 4% year-over-year on a constant currency in face of Brexit and related situations
Dice is a promising PE candidate, which not only provides cross-industry resources, but also market potential.
• Engineering, Financial, Oil and Gas, Biotechnology, Hospitality, Healthcare, Clearance Jobs
• HR opportunities: Highly skilled professionals
• Strategic development: Notable industry leaders such as Hilton, Mayo Clinic, IBM and China Petroleum
• Core strategy• Core tech franchise—Tech/data resources• Next generation efficient career sourcing
Industry Trend - HR
HR Info: DHI-DFH Vacancy Duration Measure; DHI Hiring Survey
Consulting Research: PWC, Deloitte
Future of Dice
Mobile Services launched 2015-2016: including talent solutions
Marketing Development: from email & advertisement to perspective brand building
Dice U.S.• 77,000 job
postings
Dice EU• 19,000 job
postings
HCareers(Hospitality)
• 19,000 job postings
Overview
Global Opportunities Research Oriented
Vertical Specialization
Sources: IBIS World US
Indeed.com
Though with solid support and international influence, Indeed.com lacks unique recruitment solutions and marketing strategies to ensure sustainable development.
• Solid support: Investments from NY Times Co., Allen & Company, and Union Square Ventures• International influence:
• Acquired by Japan-based Recruit Co. Ltd in October 2012 for an estimated $1.0 billion.• Covers more than 50 countries, with the US accounting for a majority of company revenue.
• Features:• Cost-saving to clients: Clients only pay a fee when they view a job posting • Salaries information, Trends, Company Search
120
320
482.3
675.6
0 100 200 300 400 500 600 700 800
2013
2014
2015
2016
Revenue ($MM)
History
Financial Performance
18Sources: IBISWorld, McClatchy.com, Bloomberg, WSJ, NASDAQ
CareerBuilder.com
Tegna Inc.53%
Tribune Company
32%
The McClatchy Company
15%
• Jointly owned private company• 15.4% Job Search Market Share• Expansion through acquisitions: cover more
verticals, regions and job seekers• Stagnant revenue
567.7
578.9578.1
575.7
570570.6
562
564
566
568
570
572
574
576
578
580
2011 2012 2013 2014 2015 2016
Company Overview and History
Revenue ($MM) Company Ownership
Strategy
•Acquisitions- Jobs Central, JobScout, EMSI, Broadbean
•International- Asia, Germany
•Features- Career Consulting- Online Resume & application
CareerBuilder is a growing potential LBO target with a client focus on job seekers.
19Sources: Bloomberg Technology
Hired
• Tech, sales, marketing• Expected to profit by 2017• Raised $40 million in equity • Acquisitions expanded the company into
Paris and Melbourne
• Highly Personalized• Free to use• Niche appeal to highly skilled• Efficient business model
• Job seekers create a profile• Hired “accepts” a small percentage• Companies hire from a pool of highly skilled
people
Company Overview
How Does It Work? Strengths
It is too early for Hired to become an LBO target.
Sources: mashable.com; Bloomberg
Mashable Inc.
Mashable can be a potential acquisition target company but lacks fundamental recruitment-based features.
Social Media
Technology
BusinessMarketing
Design
Type - Date Target
Acquisition – 2016.6.20 Whalerock Industries, CineFix
Overview Job Niche
Recent Transaction
•Private, launched in 2005•Features & Resources:
•News & Blogs, Job Collection•Acquired Whalerock
•Influence: •45M individual monthly visitors•28M social media followers•UK, Asia, Australia, France
•Total revenue 2012: $15,000,000
MARKET OVERVIEW
21
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
1Source: Monster Worldwide 2016 Financial Results; LinkedIn Corporation Form 10-K 2015
Monster and LinkedIn: Case Studies
While the two companies have similar operating models, their areas of focus determine their strategic development goals. Monster.com is focusing on investment in products and operations for the future, while
LinkedIn is focusing on maintaining their offering of products at no cost.
Strategy/Competitive Advantage• Strategic investment in product,
technology, brand support, and customer service
• Invest in operations on a global basis while controlling operating expenses
Successes• Significant realignment of sales
organizations to accelerate market expansion and acquire new customers
Potential Challenges• Increase of costs of maintaining brand
awareness and value of their brands
Strategy/Competitive Advantage• Provide many products at no cost to
customers• Help customers stay up to date on
news and ideas
Successes• Offering services to customers that
provide business benefits at no cost
Potential Challenges• Putting members first sometimes
conflicts with short-term interests of the business
• Falling behind on keeping technology up to date
Monster LinkedIn
Sources: LinkedIn 10K Form
LinkedIn Corporation (1/2)
LinkedIn has sustained growth due to well-established presence and clear strategies to achieve its goals.
• World’s largest professional network on the Internet: over 400 million members
• “Most extensive, accurate and accessible network focused on professionals”
• Value proposition: connect to opportunity• Platform used to stay connected and
informed, advance career and work smarter
Strategy
• Mission - connect world’s professionals to make them more productive and successful
• Prioritizing needs of members is most effective and most profitable means to accomplish mission and create long-term value
• Vision - create economic opportunity for every member of the global workforce
Stay connected and informedDelivering members relevant and highly engaging feed experience is critical in creating value
Advance my careerHelping members get hired and learn new skills is an essential element
Work smarterValue created for members and customers through monetized products
Core Business Operations
2Source: LinkedIn 10-K Report
LinkedIn Corporation (2/2)
• Members-professional networks: Face increased competition from established and rising companies
• Enterprises and Professional Organizations-Talent Solutions: Must continue to improve efficiency and effectiveness of HR services
• Enterprises and Professional Organizations-Marketing Solutions: LinkedIn risks losing advertisement revenue to third party competition
• Premium Subscriptions and Sales Solutions: LinkedIn may lose subscription revenue to other companies who are more established in this industry subset.
• Core value of putting customers first may conflict with short-term interests of business: Risk losing revenue opportunities
• Existing technology and website infrastructure: May need to update infrastructure to maximize customer satisfaction
• Possible Inability to operate on mobile devices
• Growth in Mobile Device Use Could Impact Desktop Use: May lose desktop advertisement opportunities
• Seasonality: As revenue growth slows, seasonal fluctuations could become more pronounced
While LinkedIn faces significant market competition, the risks it faces are not unique to its company, but rather the industry as a whole
Market Competition Risks Related to Business
Source: Monster Financial Results and Supplements, IBIS World
Monster.com
Monster has recently made changes to its strategy. Although results have been good so far, there are still high risks, and the company has failed to outpace its closest competitor, LinkedIn
• Revenue generated through job postings and database of profiles and resumes for employers
• Alliances with various media outlets to drive users to its site
• Operations in more than 40 countries
• Reallocation has shrunk net revenue• Could lead to smaller presence in the
industry• Could make Monster more efficient and
ready to grow significantly• Past months show that reallocation has
significantly lowered operating costs and increased income
• Reallocation February 10, 2015• Global workforce reduction of 300
employees, lease exit costs, impairment of certain assets, office and general expense controls
• Resulting in annualized cost savings of $40 million
-$15
-$10
-$5
$0
$5
$10
$15
Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Operating income (loss) (in $MM)
Core Business Strategy
Results of Reallocation Risks
26
Conclusion
q Growth of the industry slowing down
q Differentiation is the key
q Global presence
q Cost efficiency
q Steady member growth
q Supplementary premium membership
q Research oriented
MARKET OVERVIEW
27
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
28
Methodology
• Effectively targets specific, popular industries
- Focus on technology industries
• Growing revenue
• Global presence
• Research oriented
• Global presence
• Rapid member growth
• Diverse revenue streams
- Membership/subscription
• Unique service
- Anonymous reviews, comprehensive company insights
Dice
Glassdoor
Sources: DHI 10-K Form, NYSE
Why Dice?
Dice has established presence in the information technology and engineering online employment sector. This sector has high growth potential and will eventually have a high demand for qualified individuals
looking for employment
Reasoning and Rationale
Stock Performance
Growth Opportunities• High potential for growth in information
technology and engineering• Results in need for employment• Dice can connect employers to qualified
individuals• Dice has high potential for growth
• Dice is already well-established• Ready for growth• High potential for growth• Information technology and engineering will
only become more important in the future
Financials
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
2011 2012 2013 2014 2015
Revenue$6.55
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
$11.00
$12.00
Nov-11 Nov-12 Nov-13 Nov-14 Nov-15
30Source: CapIQ
Dice Comparable Companies
It is difficult to find a core comparable for Dice, given its low market capitalization and revenue volume. However, because Dice performs significantly worse than some younger Internet companies (its aspirational comparable set), we can conclude that DHI Group will be better off in the arms of a private equity investor
Company Name Latest Close Price
Market Cap Enterprise ValueEV/Revenue EV/EBITDA Price/Earnings
LTM 2016E LTM 2016E LTM 2016E
LinkedIn Corporation $195.15 $26,449.87 $24,275.41 6.7x 6.4x 50.9x 21.3x -554.3x 44.5xTwitter, Inc. 18.06 12,811.64 10,801.68 4.3x 4.2x 259.2x 15.1x -54.9x 32.5xFacebook, Inc. 120.38 346,955.32 320,815.32 13.0x 11.8x 24.9x 18.2x 51.2x 24.2xAlphabet, Inc. 780.23 531,364.80 452,246.80 5.3x 5.1x 16.0x 12.6x 37.3x 19.8xSEEK Limited 15.00 5,197.19 5,898.49 6.1x 0.0x 16.4x 0.0x 39.5x 25.3x
75th Percentile 195.15 346,955.32 320,815.32 6.7x 6.4x 50.9x 18.2x 39.5x 32.5x
Mean 225.76 184,555.76 162,807.54 7.1x 5.5x 73.5x 13.4x -96.2x 29.3x
Median 120.38 26,449.87 24,275.41 6.1x 5.1x 24.9x 15.1x 37.3x 25.3x25th Percentile 18.06 12,811.64 10,801.68 5.3x 4.2x 16.4x 12.6x -54.9x 24.2x
DHI Group, Inc. $6.60 $328.55 $389.81 1.64x 1.78x 7.51x 7.61x 17.73x 18.33x
Implied DHX EV (mean) $ 1,678.50 $1,199.95 $3,813.55 $993.84 $3,826.98 $746.75Implied DHX EV (median) $1,448.60 $1,107.72 $1,294.24 $1,113.88 -$1,398.15 $654.88
Implied DHX Market Cap (mean) $1,617.25 $1,138.69 $3,752.29 $932.58 $3,765.73 $682.33Implied DHX Market Cap (median) $1,387.34 $1,046.46 $1,232.98 $1,175.14 -$1,459.41 $590.46
Company Name LTM Revenue 2016E Revenue LTM EBITDA 2016E EBITDAExp. Revenue Growth Exp. EBITDA Growth Margins1 Year 2 Year 1 Year 2 Year EBITDA
LinkedIn Corporation $3,615.05 $4,311.16 $477.35 $1,138.36 26.9% 22.7% 46.0% 28.9% 13.2%Monster Worldwide, Inc. 612.70 - 54.40 - - 0.0% 0.0% 0.0% 0.0% 0.0%Twitter, Inc. 2,522.89 2,708.86 41.67 $717.02 15.2% 12.7% 28.5% 23.1% 1.7%Facebook, Inc. 24,670.00 34,154.91 12,863.00 $17,626.22 52.3% 43.1% 57.2% 43.8% 52.1%Alphabet, Inc. 85,537.00 99,308.00 28,294.00 $35,849.54 19.0% 17.4% 21.0% 19.0% 33.1%SEEK Limited 965.40 1,037.03 346.60 $374.55 9.1% 9.6% 7.8% 10.2% 35.9%
DHI Group, Inc. $237.09 $218.64 $51.89 $73.94 -12.7% -8.0% -22.0% -15.4% 21.9%
31Source: CapIQ
Dice Discounted Cash Flow
Discounted Cash Flow Analysis FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Years 1.0 2.0 3.0 4.0 5.0
Revenue $ 213.48 $ 262.62 $ 259.77 $ 285.92 $ 315.42 $ 348.79 $ 374.85 $ 410.86
Less: COGS (23.43) (37.21) (39.15) (43.09) (47.53) (52.56) (56.49) (61.92)
Less: Operating Expenses (175.30) (216.61) (219.59) (196.08) (214.74) (235.71) (251.45) (273.55)
EBIT 14.76 8.80 1.03 46.75 53.15 60.51 66.91 75.39
Taxes 9.59 5.72 0.67 28.05 31.89 36.31 40.15 45.24
NOPAT 5.17 3.08 0.36 18.70 21.26 24.21 26.76 30.16
Plus: Depreciation 17.40 27.20 23.19 25.53 28.16 31.14 33.47 36.68
Change in Working Capital 1.22 (10.78) (3.19) 34.82 11.65 13.17 10.29 14.22
Less: Capex (10.56) (8.71) (9.08) (11.20) (12.36) (13.67) (14.69) (16.10)
Unlevered Free Cash Flow $ 13.24 $ 10.79 $ 11.28 $ 67.85 $ 48.71 $ 54.85 $ 55.83 $ 64.96
WACC 9.38%
PV of FCF $62.03 $40.71 $41.92 $39.01 $41.49
WACC8.5% 8.9% 9.4% 9.9% 10.4%
Exit
Mul
tipl
e 8.5x 16.75 16.46 16.10 15.75 15.418.0x 15.97 15.69 15.35 15.02 14.707.5x 15.18 14.92 14.60 14.28 13.987.0x 14.40 14.15 13.85 13.55 13.266.5x 13.62 13.38 13.09 12.81 12.54
Exit Multiple Terminal ValuePV of Projected Period $225.16 2020E EBITDA 112.07 EBITDA Multiple 7.5x
Terminal Value $841.68 Discount Years 5.0 PV of Terminal Value $537.64
Enterprise Value $762.802016A Net Debt $66.95Implied Market Cap $695.85Diluted Shares Outstanding 47.57Implied Share Price $14.63Current Share Price $6.60Upside / Downside 121.6%
Dice demonstrates significant unrealized intrinsic value in the cash flow analysis
32Source: CapIQ
Dice Leveraged Buyout
Proforma Financials
Fiscal Year Ending Jan
31 AssumptionsFY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Current Share Price $6.6
Revenue $259.8 $285.9 $315.4 $348.8 $374.8 $410.9 Premium (10.0%)Total Expenses 218.6 282.8 286.2 319.2 337.4 369.7 Offer Price $5.9
EBIT $41.2 $3.1 $29.2 $29.6 $37.4 $41.2 Shares Outstanding 49.0 Less: Interest Expense (3.3) (3.3) (3.3) (3.3) (3.3) (3.3) Purchase Price $291.1
EBT $37.9 ($0.2) $25.94 $26.3 $34.1 $37.9 Plus: Debt 90.7
Taxes (14.0) (16.6) (19.2) (21.7) (23.9) (26.8) Less: Cash 29.4
Effective Tax Rate 37.0% 33.2% 34.0% 34.0% 34.0% 34.0% Transaction Value $352.3 Tax Effected EBT $23.9 ($16.8) $6.75 $4.6 $10.3 $11.1
Plus: Depreciation & Amortization $23.2 $25.5 $28.2 $31.1 $33.5 $36.7 FY 2015 EBITDA $64.37 Change in Working Capital (14.4) 26.2 9.7 10.9 8.5 11.8 EBITDA Multiple 7.2x Less: Capital Expenditures (9.1) (11.2) (12.4) (13.7) (14.7) (16.1) Entry Multiple 5.5x Less: Scheduled Senior Debt Paydown (2.3) (2.3) (2.3) (2.3) (2.3) Exit Multiple 8.0x
Cash Available for Debt Paydown $23.5 $21.5 $29.96 $30.7 $35.3 $41.2 Less: Discretionary Debt Paydown (21.5) (30.0) (30.7) (35.3) (41.2) Sources and Uses
Excess Cash Flow $0.00 $0.00 $0.00 $0.00 $0.00 Multiple % Total AmountDebt Schedule Senior Debt (TLB) 3.5x 47.9% $225.3 TLB $225.3 $201.5 $169.3 $136.3 $98.7 Notes 0.5x 6.8% 32.2 Notes 32.2 32.2 32.2 32.2 32.2 Excess Cash (15.0%) (70.6)
Total Beginning Balance $257.5 $233.7 $201.5 $168.5 $130.9 Sponsor's Equity 60.2% 283.1 TLB Mandatory Repayment (1% Amort.) ($2.3) ($2.3) ($2.3) ($2.3) ($2.3) Total Sources 470.0 Discretionary TLB Debt Paydown (21.5) (30.0) (30.7) (35.3) (41.2) Transaction Value 75.0% $352.3
Total Debt Paydown ($23.8) ($32.2) ($33.0) ($37.6) ($43.5) Minimum Cash Balance 21.3% 100.0 TLB $201.5 $169.30 $136.31 $98.74 $55.24 Transaction Expenses 3.7% 17.6 Notes 32.2 32.2 32.2 32.2 32.2 Total Uses $470.0
Total Ending Balance $233.7 $201.5 $168.5 $130.9 $87.4 Debt/EBITDA 4.0x Cash BalanceBeginning Balance $100.0 $100.0 $100.0 $100.0 $100.0 Investor ReturnsPlus: Excess Cash Flow 0.00 0.00 0.00 0.00 0.00 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Total Ending Cash Balance $100.0 $100.0 $100.0 $100.0 $100.0 EBITDA $28.6 $57.4 $60.7 $70.9 $77.8 Interest Expense Multiple 8.0x TLB 5.0% 5.0% 5.1% 5.2% 5.4% EV $622.7 Senior Unsecured Debt 10.0% 10.0% 10.0% 10.0% 10.0% Out. Debt $233.7 $201.5 $168.5 $130.9 $87.4
Average Interest Rate 5.7% 5.7% 5.9% 6.2% 6.7% Cash (100.0) (100.0) (100.0) (100.0) (100.0)TLB $10.7 $9.3 $7.7 $6.1 $4.1 Net Debt $133.7 $101.5 $68.5 $30.9 ($12.6)Senior Unsecured Debt 3.2 3.2 3.2 3.2 3.2 11/30/2016 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020
Total Interest Expense $13.9 $12.5 $11.0 $9.3 $7.4 ($283.1) $635.3 IRR 21.9%
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020EBITDA/Interest Expense 2.06x 4.60x 5.54x 7.63x 10.58xEBITDA/Total Mandatory Payment 1.77x 3.89x 4.59x 6.14x 8.10x
Even though Dice shows significant potential as a PE target company, a successful LBO is only possible with a low premium or at a discount
Sources: glassdoor.com, linkedin.com
Why Glassdoor?
• Growing database: millions of company reviews and ratings
• Global presence: expansion into global markets, especially Europe
• Sheer volume of growth and traffic on the sitee.g. Profile page of Dell visits increased from 50,000 times/month to 100,000 times/month in 18 months
• Could expand job target search to have bigger presence in online employment industry
• Employee based: CEO ratings, HR reviews, salaries, etc.
• Mistrust of employers would be a reason to go to Glassdoor
• Could be good supplement to job search• Moderate reviews:
• Pros and Cons required in a review• Avoid pure, biased complaints• Trusted by job seekers
Unique Standpoint
Sales Volume Growth
Potential
Glassdoor is a company with rapid growth, global presence, and differentiation points.
0.00 m
0.50 m
1.00 m
1.50 m
2.00 m
2.50 m
07 08 09 10 11 12 13 14 15 16
Sales Volume in USD
34Source: CapIQ
Glassdoor Comparable Companies
Company Name Latest Close Price
Market Cap Enterprise ValueEV/Revenue EV/EBITDA Price/Earnings
LTM 2016E LTM 2016E LTM 2016E
DHI Group, Inc. $6.60 $328.55 $389.81 1.6x 1.7x 7.5x 6.7x 17.7x 20.5x
SEEK Limited 15.00 5,197.19 5,898.49 6.1x 0.0x 16.4x 0.0x 39.5x 25.3x
75th Percentile 12.90 3,980.03 4,521.32 5.0x 1.3x 14.2x 5.0x 34.0x 24.1x
Mean 10.80 2,762.87 3,144.15 3.9x 0.9x 12.0x 3.4x 28.6x 22.9x
Median 10.80 2,762.87 3,144.15 3.9x 0.9x 12.0x 3.4x 28.6x 22.9x
25th Percentile 8.70 1,545.71 1,766.98 2.8x 0.4x 9.7x 1.7x 23.2x 21.7x
Company Name LTM Revenue 2016E Revenue
LTM EBITDA 2016E EBITDAExp. Revenue Growth Exp. EBITDA Growth Margins
1 Year 2 Year 1 Year 2 Year EBITDA
DHI Group, Inc. $237.09 $218.64 $51.89 $58.14 -12.7% -8.0% -22.0% -15.4% 21.9%
SEEK Limited 965.40 1,037.03 346.60 $374.55 9.1% 9.6% 7.8% 10.2% 35.9%
CareerBuilder, LLC 21.30 N/A (34.70) N/A N/A N/A N/A N/A N/A
Axel Springer Norway AS 113.00 N/A 4.20 N/A N/A N/A N/A N/A N/A
en-japan Inc. 254.70 N/A 65.30 N/A N/A N/A N/A N/A N/A
Glassdoor’s comparable companies set mostly consists of small human resources and employment companies. Although this valuation is not a direct comparison of Glassdoor’s financials to the industry, we can have a better
understanding of what to expect when entering the market
MARKET OVERVIEW
35
MARKET LEADERS
PROMISING VENTURES
KEY TAKEAWAYS
PRIVATE EQUITY TARGETS
FINAL RECOMMENDATION
TEAM INTRODUCTION
36
Final Recommendation
§ Focus on growing technology industries
§ Growth potential in the arms of private equity investor
§ DHI Group has other specialized service offerings
§ Lack of financial information on Glassdoor
§ Purchase price: $291.1 Million