貝恩人力資源51net盡職調(diào)查報告001

1、bcinvestment due diligence assessment23 december 1999bcsng 2z5112osf disclaimerthe investment opportunity described below has not been recommended or approved bybain & company, inc. or any of its subsidiaries. no representation or warranty is made as to the accuracy or completeness of the inform

2、ation contained in this memorandum. oliver stratton and jim hildebrandt are distributing this memorandum in their individual capacities and not as representatives of bain & company, inc. or any of its subsidiaries. any investment in will not be guaranteed by bain & company, inc. or any of it

3、s subsidiaries. bcsng 3z5112osfagenda executive summarydetailed business assessmentus market benchmarkschina market d financialsbcsng 4z5112osfattractive online recruitment market space in china with high growth potential differentiated click-and-mortar business model (online and newspaper) with a 1

4、6 month operating history and us$1m in 1999 revenuecurrent #1 or #2 position in 3 key city markets (0.7 rms in beijing, 5.5 rms in shanghai and 0.3 rms in guangzhou)no competitor has locked up exclusive relationships with key portals - maintaining #1 or #2 position appears to be a realistic goalcapa

5、ble management including head of bains china practice and 3 former bain consultantsrealistic business plan targets (in private placement memorandum) with additional upside if timing of adjacent business roll-out (ebay, b business models for china) is accelerated (business plan financials are 99% dri

6、ven by core recruiting business)exposure to potentially significant sovereign risk given chinas unclear regulations on foreign ownership and operation of internet businessesexpected investment returns based on business plan forecasts and comparable us online recruitment valuation multiples are attra

7、ctive (base case: 3.8x return on money, 57% irr), but not blockbuster (high case: 7.9x return on money, 99% irr)prosconssummary investment evaluationexecutive summarybcsng 5z5112osfexecutive summarysource: onesource; sg cowen securities; analyst reports; company w is a china-based start-up company e

8、stablished in 1998 focused on the online recruitment marketits key partner team includes 1 bain partner (rick yan) and 3 former bain is seeking to raise us$3m in exchange for a 5% equity stake in the businessunderlying china online recruiting market growth and penetration (included in business plan

9、targets)adjacent e-business 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 1998a website, , launched in jan 1999 it is currently one of the leading players in each of the h

10、igh-end multinational recruitment advertising markets of beijing, shanghai and guangzhou500,000 readershiprelationship with 5,000 hr managersresume bank has 50,000 subscribers (highly educated professionals and middle managers: relatively affluent, highly paid customer base) is targeting growth thro

11、ugh a combination of initiatives:growth of core online recruiting business in existing and new city marketsembarking 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 ap

12、plicationsestablishing an e-commerce business incubatorbackgroundstrategy and business modelinvestment upsidechina-specific legal and regulatory riskintrinsically low entry barriersspeed in reaching scalekey risksinvestment overviewbcsng 6z5112osfbain rolebusiness plan developmentaccountingadvisory

13、boardrecruiting supportcreativeseed fundingtemporary management technicalfundraising supportlegalfacilities/spacestrategic partner introductionscriteriamarket potentialbusiness conceptleadership opportunityteambain value addedbain learning bain compensationcompany: proposed terms: to invest us$0.5m

14、in exchange for 0.83% equity stake in companyrequired resources:overviewsee attachedrecommendationsee attachedcurrent investors: contact/principals: rick yanxxscoring44442.523.5commentschinas internet growth potential is very high given its current embryonic stage (internet penetration from 4% in 19

15、98 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 inefficient recruiting proces

16、ses/channels)unique click-and-mortar business model with newspaper and online mediaopportunity to leverage employer and job seeker customer base into adjacent business is currently #1 or #2 in beijing (0.7 rms), shanghai (5.5 rms) and guangzhou (0.3 rms)no competitor has locked up exclusive relation

17、ships with leading china portalsthe senior management team has had several years work experience in china with bain & company and have worked together for morethan 3 yearssome potential for bain case team involvementrelatively low ownership stake (0.83%) yields limited influence on management di

18、rectionpotential to explore multiple e-business opportunities in chinacompared with us and china benchmarks, s pre-money valuation is relatively highpotential to unlock higher valuation multiple long term by spinning off online business in the futurehowever, investment is exposed to considerable chi

19、na-specific regulatory risk on top of standard operating riskno indication of potential participation in subsequent financing roundsopportunity screenexecutive summarybcsng 7z5112osfscoringdescriptioncriteria1 - 2 - 3 - 4 - 5 $1bmarketmulti-billion dollar opportunityis the idea going after a large m

20、arket opportunity?market potential1 - 2 - 3 - 4 - 5 baureverseauction like innovationdoes the concept create substantial customer value and/or eliminate substantial cost?business concept1 - 2 - 3 - 4 - 5 me tohighly proprietary approach; uncharted spacecan this company/idea become the market leader?

21、 does it have or could it establish proprietary advantages?leadership opportunity1 - 2 - 3 - 4 -5 struggle to hireteam inplaceare there high quality team members involved?are there resources to go make it happen? team1 - 2 - 3 - 4 - 5 traditional consultingtransformationalimpactcan bain shape the de

22、stiny of this company?bain value addedwill bain gain valuable experience from this investment?bain learning 1 - 2 - 3 - 4 - 5passiveinvestment awesome learning opportunityplatformdealwill bain be fairly compensated for investments and risks?bain compensation1 - 2 - 3 - 4 - 5npv =opportunity costchan

23、ce tomake $25m+executive summaryscreening criteriabcsng 8z5112osfexecutive summaryhybrid vs. pure online playthe hybrid click-and-mortar business model has several advantages over the pure online plays. description:increased certaintyof earningsmore stable and certain earnings stream from newspaper

24、business dampens the more volatile and uncertain earnings from the online businessbarriers to entry higher for newspaper businessgreater customer penetrationincreased access to customerscomplementary distribution channelsjoint branding strategy improves customer recallhigher overall profitabilityunl

25、ike pure online models, the newspaper business is profitable48% operating margin for career post (driven by 5% marketing/sales spend)negative operating margins for (driven by 203% marketing/sales spend)bcsng 9z5112osfbusiness plan targetstotal costs: us$4.4mus$7.4mus$11.1moperating profit:(us$0.2m)u

26、s$2.0mus$1.8moperating margin:(3.8%)21.7%13.7%ebitda:(us$0.3m)us$2.0mus$1.8mnon-recruitment*career postcagr(00-02)150%50%source: private placement memorandumrevenue(us$m)024681012142000f(bainforecast)2000f(businessplan)2001f(bainforecast)2001f(businessplan)2002f(bainforecast)2002f(businessplan)execu

27、tive ss 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*includes all adjacent busine

28、ss opportunities (, , incubator)bcsng 10z5112osfcy929x459x02004006008001,000 xcareer p (blended multiple)hheadhcareerb6x38x13x71x21x11x020406080 xus and china valuation bs overall valuation multiple is roughly in line with us online only recruitment benchmarks, although a standalone valuation multip

29、le (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 summarynote: price-to-sales multiple for career post, and based on year 2000 projections (price is pre-money valuation); all ot

30、her 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 memorandumonline recruitment price-to-sales multiplesinternet portal multiple(china vs. us)price-to-salesmultipleprice-to-sa

31、lesmultiplemarketcapitalisation:$1,141m$146m$150mrevenue:$16m$7m$14mbcsng 11z5112osfinvestment risksexecutive summarychina internet regulatory riskcurrently, regulations on foreign internet participation in china are unclearofficially, up to 49% foreign ownership is allowed but active foreign operat

32、ing involvement is prohibitedunofficially, significant foreign operating involvement is already in place in many e-business venturesimpact of wto should be positive, but initial mii reactions have not been positiveunder wto, up to 49% foreign ownership and active foreign operating involvement is all

33、owedhowever, minister wu of mii has advocated a clampdown of foreign participation without specific detailsseveral ministries aiming to control internet regulations with the ministry of information and industry (mii) emerging as the leading partners are comfortable with china risks based on multiple

34、 discussions with senior government officialschinese title law not well developedphysical and intellectual property not well protectedintrinsically lowentry barrierspotential entry by internet portals or online newspaper (in classified section)low capital investments requiredsubscriber base already

35、establishedhowever, career post business has higher entry barriersspeed inreaching scaletrading off short-term profitability for long-term market dominancehigh customer acquisition costability to lock up alliances with major portals ahead of competitorsthe investment in is not without risks.standard

36、 operating risksbcsng 12z5112osfpre and post-money v valuationadjustedbain valuation(base case)adjusted bain valuation(low case)$60m$43m$39m02040us$ 60mmarketcapitalization(us$ m)post money value addedpre money valuation$36m$57m 2000 sales: $4.25m $4.1m $4.1m blended price-to-sales multiple*: 13.4x

37、9.5x price-to-sales multiple:38x16x11xsource: private placement memorandum; bain analysisnote: price-to-sales blended multiple based on varying price-to-sales multiples of pre-money: 8.3%post money: 7.7%pre-money: 5.3%post money: 5.0%$3m investmentbeing raisedexecutive summarypre-money: 7.5%post mon

38、ey: 6.9%*price-to-sales multiple based on year 2000 projections$40ms valuation is on the high end, driven by the high price-to-sales multiple of its online recruitment business.bcsng 13z5112osfpotential returns low case:post-money valuationus$60myear 2002 valuationrevenueus$7.85m from career postus$

39、4.82m from price-to-sales multiple4x for career post20 x for 3 year return2.2xassumptionsvaluationreturn on moneyirr29%us$130mthe expected returns are attractive but not blockbuster.executive summarybase case:us$60m3.8x57%us$230mrevenueus$7.85m from career postus$4.82m from price-to-sales multiple6x

40、 for career post38x for high case:us$60m7.9x99%us$475mrevenueus$7.85m from career postus$4.82m from us$6m from adjacent e-businessesprice-to-sales multiple6x for career post38x for 38x for adjacent e-businessesbcsng 14z5112osfagenda executive summarydetailed business assessmentus market benchmarksch

41、ina market d financialsbcsng 15z5112osfus internet penetration and online recruitment forecast(1998-2002f)us market benchmarksthe us online recruiting market is projected to be us$1b in 2002.source: idc; goldman sachs research; euromonitor; forrester research; bain estimatesinternetpenetrationonline

42、recruitingspend19981999e2000e2001e2002e01020304045%02505007501,000us$ 1,250minternetpenetration(%)onlinerecruitingspend(us$ m)online recruitingspend cagr(1998-2002e)79%bcsng 16z5112osfpricing models: us markets source: competitor websites; industry analyst reports; interbiznet; forrester research; b

43、ain analysismost of the leading online job search sites in the us offer high margin job board services, accounting for the bulk of online recruitment revenues.us market benchmarksdescription:estimated market size (1998):key players:job boardrecruiters are charged for each job posted on recruiting si

44、te/ networkus$85mmcareerbchdcwsubscriptionrecruiters are charged a flat fee per time period for posting jobs on recruiting site/networkus$16mhrupgraderecruiters are charged an upgrade premium so that they can increase the exposure of their jobs (listed at the front of any search)us$5mheadh*based on

45、1998 financialstypical pricing:$20-200 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 monthtypical gross margin*:75%85%98% basic chargesadditional chargestarget pricing model of bcsng 17z5112osfus online recruitment examples

46、*as of 10 december 1999targeting profitable customers and having a strong market position are key to the success of online recruitment businesses in the us.us market benchmarkstarget market:market position:h#1 choice for corporate recruiters100,000 job postings2,520 clientsheadh#1 site among individ

47、uals in the $75k-$100k annual income bracket#3 player in mass market online recruitment175,000 job postings1,104 clientscareerbmass market recruiting#5 player in mass market online recruitment100,000 job postings870 clientsgross margin1999 revenue/clientsales and marketing spend/revenue85% us$4,8008

48、8%98% us$4,800245%75% us$13,908182%financial measures (1999): valuation:(price-to-sales multiple*)71x21x11xpartnerships:noneprovides content to strategic partners such as peopleweb communications and partnership with microsoft to launch career channel on msn; agreement with several lycos network mem

49、bers gross margin1999 revenue/clientsales and marketing spend/revenuesource: competitor websites; industry analyst reports; company financialsbcsng 18z5112osfrecruitment business value chain for corporate customer:for job seeker:customer acquisitiondevelop network of corporate customersbuild strong

50、relationships with hr managersbuild resume databasematchmakingadvertise quality of resume databaseadvertise quality of corporate customerstie up with internet portals/newspapersservicingexpand product and service offeringhr website managementexecutive searchexpand product and service offeringjob see

51、ker virtual communitycareer development information serviceswallet deepeningcustomer loyalty programsadjacent business opportunitiescustomer loyalty programsadjacent business opportunitiesactivities: relationship managementincreasing differentiation and barriers to entryus market benchmarkshaving ac

52、cess 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 postingsincreased number of job postingsincreased customer loyaltyincreased job seeker churnincreased customer loyaltyincrea

53、sed revenue/ customer and key chinacompetitors current capabilitiessource: literature searchesbcsng 19z5112osfkey success factorsdescription:performance measures:examples:high employer retentionhigh number of repeat customers (employers) using services from year to yearstrong relationships with recr

54、uiters and job hunterspercentage repeat customersrevenues/customerhquality resume databaseeffectively maintain and leverage high quality job-seeker resume base, providing for the best recruitment results for both employers and job-seekersnumber of reputable corporate customerspercentage successful p

55、lacementshheadhexclusive partnershipsagreement with portals and/or business sites to be the exclusive provider/advertiser of job search products and servicesnumber of eyeballsnumber of job postingscareerbmheadh us market benchmarksthe success of online recruitment has been attributed to three key su

56、ccess factors.bcsng 20z5112osfagenda executive summarydetailed business assessmentus market benchmarkschina market d financialsbcsng 21z5112osfinternetpenetrationonlinerecruitingspend19981999e2000e2001e2002e01020304045%02505007501,000us$ 1,250minternetpenetrationonlinerecruitingspend19981999e2000e20

57、01e2002e05101520%051015202530us$ 35msource: idc; goldman sachs research; euromonitor; forrester research; bain estimatesinternetpenetration(%)onlinerecruitingspend(us$ m)internetpenetration(%)onlinerecruitingspend(us$ m)online recruiting spend cagr(1998-2002e)online recruiting spend cagr(1998-2002e)

58、79%104%us marketchina major cities(beijing, shanghai and guangzhou)china market dynamicsus and china internet penetration and online recruiting forecast(1998-2002f)the china online recruiting market is projected to be us$25m in 2002, a fraction of the us market size. based on business plan projectio

59、ns, this implies a 20% market share for bcsng 22z5112osfabove 6051-6041-5036-4031-3526-3021-2516-20under 16otherssichuanzhejiangjiangsushanghaiguangdongbeijingph.d. mastersundergraduatejunior collegehigh schoolbelow high schoolby ageby regionby education background4m4m4m020406080100%percent oftotal usersinternet user segmentationsource: cnnic reportchina market ds target customer s online recruiting business model is targeting the majority of chinas internet users.bcsng 23z5112osfrecruitment website characteristicssource: website search typejob agency websitethere are 3 types of recruitment w