BAIN人力资源 - 尽职调查报告

nullInvestment Due Diligence AssessmentInvestment Due Diligence Assessment23 December 1999 DisclaimerThe investment opportunity described below has not been recommended or approved by Bain & Company, Inc. or any of its subsidiaries. No representation or warranty is made as to the accuracy or completeness of the information 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 51net.com will not be guaranteed by Bain & Company, Inc. or any of its subsidiaries.AgendaAgenda Executive Summary Detailed Business Assessment US Market Benchmarks China Market Dynamics 51net.com FinancialsSummary Investment EvaluationSummary Investment EvaluationAttractive online recruitment market space in China with high growth potential Differentiated click-and-mortar business model (online and newspaper) with a 16 month operating history and ~US$1M in 1999 revenue Current #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 goal Capable management including head of Bain’s China practice and 3 former Bain consultants Realistic business plan targets (in Private Placement Memorandum) with additional upside if timing of adjacent business roll-out (eBay, Buy.com business models for China) is accelerated (business plan financials are 99% driven by core recruiting business)Exposure to potentially significant sovereign risk given China’s unclear regulations on foreign ownership and operation of internet businesses Expected investment returns based on business plan forecasts and comparable US online recruitment valuation multiples are attractive (base case: 3.8X return on money, 57% IRR), but not blockbuster (high case: 7.9X return on money, 99% IRR)ProsConsExecutive SummaryInvestment OverviewInvestment OverviewExecutive SummarySource: OneSource; SG Cowen Securities; Analyst Reports; Company Websites51net.com is a China-based start-up company established in 1998 focused on the online recruitment market Its key partner team includes 1 Bain partner (Rick Yan) and 3 former Bain consultants 51net.com 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 targets) Adjacent e-business opportunities (not included in business plan targets)51net.com has a click-and-mortar business model for job placements, consisting of a newspaper, Career Post Weekly, launched in Oct 1998 a website, 51job.com, launched in Jan 1999 It is currently one of the leading players in each of the high-end multinational 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) 51net.com is targeting growth through a combination of 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, buy.com business models for China) developing 51net.com into an umbrella brand with a strong portfolio of vertical applications establishing an e-commerce business incubatorChina-specific legal and regulatory risk Intrinsically low entry barriers Speed in reaching scaleOpportunity ScreenOpportunity ScreenBain role Business Plan Development Accounting Advisory Board Recruiting Support Creative Seed Funding Temporary Management Technical Fundraising Support Legal Facilities/Space Strategic Partner IntroductionsCriteriaMarket potentialBusiness conceptLeadership opportunityTeamBain value addedBain learning Bain compensationCompany: 51net.comProposed Terms: To invest US$0.5M in exchange for 0.83% equity stake in companyRequired resources: Overview See attachedRecommendation See attachedCurrent investors: Contact/principals: Rick YanXXCommentsChina’s internet growth potential is very high given its current embryonic stage (internet 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 inefficient 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 opportunities51net.com 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 relationships with leading China portalsThe senior management team has had several years work experience in China with Bain & Company and have worked together for more than 3 yearsSome potential for Bain case team involvement Relatively low ownership stake (0.83%) yields limited influence on management directionPotential to explore multiple e-business opportunities in ChinaCompared with US and China benchmarks, 51net.com’s pre-money valuation is relatively high Potential to unlock higher valuation multiple long term by spinning off online business in the future However, investment is exposed to considerable China-specific regulatory risk on top of standard operating risk No indication of potential participation in subsequent financing roundsExecutive SummaryScreening CriteriaScreening CriteriaExecutive SummaryHybrid vs. Pure Online PlayHybrid vs. Pure Online PlayExecutive SummaryThe hybrid click-and-mortar business model has several advantages over the pure online plays. Description:Increased certainty of earningsMore stable and certain earnings stream from newspaper business dampens the more volatile and uncertain earnings from the online business barriers to entry higher for newspaper businessGreater customer penetrationIncreased access to customers complementary distribution channels joint branding strategy improves customer recallHigher overall profitabilityUnlike pure online models, the newspaper business is profitable 48% operating margin for Career Post (driven by 5% marketing/sales spend) negative operating margins for 51net.com (driven by 203% marketing/sales spend)Business Plan TargetsBusiness Plan TargetsTotal costs: US$4.4M US$7.4M US$11.1M Operating profit: (US$0.2M) US$2.0M US$1.8M Operating margin: (3.8%) 21.7% 13.7% EBITDA: (US$0.3M) US$2.0M US$1.8MNon- recruitment*51job.comCareer PostCAGR (‘00-02)150%50%Source: 51net.com Private Placement MemorandumRevenue (US$M)2000F (Bain Forecast)2000F (Business Plan)2001F (Bain Forecast)2001F (Business Plan)2002F (Bain Forecast)2002F (Business Plan)Executive Summary51net.com’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*Includes all adjacent business opportunities (51buy.com, 51price.com, incubator)US and China Valuation BenchmarksUS and China Valuation Benchmarks51net.com’s overall valuation multiple is roughly in line with US online only recruitment benchmarks, although a standalone 51job.com valuation multiple (more apples to apples) is relatively high. However, 51net.com’s valuation multiple is considerably lower than that of China.com, the only NASDAQ listed China internet benchmark.Executive SummaryNote: Price-to-sales multiple for Career Post, 51job.com and 51net.com based 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; 51net.com Private Placement MemorandumOnline Recruitment Price-to-Sales Multiples Internet Portal Multiple (China vs. US)Price-to- Sales MultiplePrice-to- Sales MultipleMarket capitalisation: $1,141M $146M $150M Revenue: $16M $7M $14MInvestment RisksInvestment RisksExecutive SummaryChina internet regulatory riskCurrently, regulations on foreign internet participation in China are unclear 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 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 (MII) emerging as the leading regulator 51net.com 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 protectedThe investment in 51net.com is not without risks.Standard operating risksPre and Post-Money ValuationPre and Post-Money Valuation$36M$57M51net.com 2000 Sales: $4.25M $4.1M $4.1M 51net.com blended Price-to-sales multiple*: 13.4x 9.5x 8.5x 51job.com price-to-sales multiple: 38x 16x 11xSource: 51net.com Private Placement Memorandum; Bain Analysis Note: 51net.com price-to-sales blended multiple based on varying price-to-sales multiples of 51job.comPre-Money: 8.3% Post Money: 7.7%Pre-Money: 5.3% Post Money: 5.0%$3M investment being raisedExecutive SummaryPre-Money: 7.5% Post Money: 6.9%*Price-to-sales multiple based on year 2000 projections$40M51net.com’s valuation is on the high end, driven by the high price-to-sales multiple of its online recruitment business.Potential ReturnsPotential Returns Low Case:Post-money ValuationUS$60MYear 2002 ValuationRevenue US$7.85M from Career Post US$4.82M from 51job.com Price-to-sales multiple 4x for Career Post 20x for 51job.com3 Year Return2.2xAssumptionsValuationReturn on MoneyIRR29%US$130MThe expected returns are attractive but not blockbuster.Executive SummaryAgendaAgenda Executive Summary Detailed Business Assessment US Market Benchmarks China Market Dynamics 51net.com FinancialsUS Internet Penetration and Online Recruitment Forecast (1998-2002F)US 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 EstimatesPricing Models: US MarketsPricing Models: US Markets Source: Competitor Websites; Industry Analyst Reports; Interbiznet; Forrester Research; Bain 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 site/ networkUS$85MMonster.com CareerBuilders.com Career.com Headhunter.com Dice.com Careermosaic.com Wsj.career.comSubscriptionRecruiters are charged a flat fee per time period for posting jobs on recruiting site/networkUS$16MHotjobs.com Recruitersonline.comUpgradeRecruiters are charged an upgrade premium so that they can increase the exposure of their jobs (listed at the front of any search)US$5MHeadHunter.com*Based on 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 ChargesUS Online Recruitment ExamplesUS Online Recruitment Examples*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:Hotjobs.com#1 choice for corporate recruiters100,000 job postings 2,520 clientsHeadHunter.com#1 site among individuals in the $75K-$100K annual income bracket #3 player in mass market online recruitment175,000 job postings 1,104 clientsCareerBuilders.comMass market recruiting #5 player in mass market online recruitment100,000 job postings 870 clientsGross margin 1999 Revenue/client Sales and marketing spend/revenue85% US$4,800 88%98% US$4,800 245%75% US$13,908 182%Financial Measures (1999): Valuation: (Price-to-sales multiple*)71x21x 11xPartnerships:NoneProvides content to strategic partners such as PeopleWeb Communications and justsell.comPartnership with Microsoft to launch career channel on MSN; agreement with several Lycos Network members Gross margin 1999 Revenue/client Sales and marketing spend/revenueSource: Competitor Websites; Industry Analyst Reports; Company FinancialsRecruitment Business Value ChainRecruitment Business Value Chain For Corporate customer:For Job seeker:Customer acquisitionDevelop network of corporate customers Build strong relationships with HR managersBuild resume databaseMatchmakingAdvertise quality of resume databaseAdvertise quality of corporate customers Tie up with internet portals/newspapersServicingExpand product and service offering HR website management executive searchExpand product and service offering job seeker virtual community career development information servicesWallet deepeningCustomer loyalty programs Adjacent business opportunitiesCustomer loyalty programs Adjacent business opportunitiesActivities: Relationship managementIncreasing differentiation and barriers to entryUS Market BenchmarksHaving 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 postingsIncreased number of job postingsIncreased customer loyalty Increased job seeker churnIncreased customer loyalty Increased revenue/ customer Source: Literature SearchesKey Success FactorsKey Success FactorsDescription:Performance measures:Examples:High employer retentionHigh number of repeat customers (employers) using services from year to year Strong relationships with recruiters and job huntersPercentage repeat customers Revenues/customerHotjobs.comQuality 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 customers Percentage successful placementsHotjobs.com HeadHunter.comExclusive partnershipsAgreement with portals and/or business sites to be the exclusive provider/advertiser of job search products and servicesNumber of eyeballs Number of job postingsCareerBuilders.com Monster.com HeadHunter.com US Market BenchmarksThe success of online recruitment has been attributed to three key success factors.AgendaAgenda Executive Summary Detailed Business Assessment US Market Benchmarks China Market Dynamics 51net.com FinancialsUS and China Internet Penetration and Online Recruiting Forecast (1998-2002F)US and China Internet Penetration and Online Recruiting Forecast (1998-2002F)Source: IDC; Goldman Sachs Research; Euromonitor; Forrester Research; Bain EstimatesInternet Penetration (%)Online Recruiting Spend (US$ M)Internet Penetration (%)Online Recruiting Spend (US$ M)Online Recruiting Spend CAGR (1998-2002E)Online Recruiting Spend CAGR (1998-2002E)79%104%US Market China Major Cities (Beijing, Shanghai and Guangzhou)China Market DynamicsThe 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 51job.comInternet User SegmentationInternet User SegmentationSource: CNNIC ReportChina Market Dynamics51net.com’s online recruiting business model is targeting the majority of China’s internet users.Recruitment Website CharacteristicsRecruitment Website CharacteristicsSource: Website Search TypeJob Agency WebsiteThere are 3 types of recruitment websites in China.CharacteristicsNo. of WebsitesExampleHR Website Classified AdvertisementRecruitment 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 service included Focus on regional labor marketInternet content provider Recruiting is minor portion of their content Business website, local city website and industry website are included 51job.com Zhaopin.com www.Work-job.Com (Xian Talent Market) job.iii-net.com (Wuxi Talent Market) www.tjrc.com.cn (Northern China Talent Market) 485868263.net hubeimarket.com.cnChina Market DynamicsChina Online Recruitment Competitor Market Share by Geography (1999)China Online Recruitment Competitor Market Share by Geography (1999)Source: 51net.com Private Placement Memorandum51net.com is currently the #1 or #2 player in Beijing, Guangzhou and Shanghai.China Market DynamicsOnline Recruitment Competitor ProfilesOnline Recruitment Competitor ProfilesSource: Website SearchChina-HR.comZhaopin.comCjol.comInvestorJob Availability*Customer ReactionPosition ProvidedCompany ServedBusiness ModelPartnerse-channel Management Consulting CompanyShenzhen CJOL Human Resources Co, LTDManagerial, Technical StaffManagerial, Technical Staff45181313 resumes accepted currently, 34067 accepted resumes accumulatedManagerial, Technical Staff Alliance Consulting Ltd.2830452259687 registered individualsBoth foreign companies and local companies, mainly high profile jobsFocus on MNC and Hi-tech companies 228 companies served6807 companies registered Both local companies and foreign companiesCombination headhunting website recruitment service job magazineCombination website recruitment service headhunting e-commerceCombination headhunting website recruitment service job magazine BBSSohu.com41 partners including Sohu, Netease,Sina and 263Net12 partners including Yahoo China, Netease,263NetChina Market Dynamics*As of 20 Dec 1999Online Recruitment Relationship with PortalsOnline Recruitment Relationship with Portals51net.com and its competitors have relationships with several of the most leading portals in China -- however, no competitor has been able to lock up exclusive relationships51jobChina-HR:CJOL:Number of HomepagesCooperative RelationshipsZhaopin:Note: CNNIC-China National Network Information Center; 9,906 web sites in survey Source: July 1999 CNNIC Survey of 52549 users; Bain Phone InterviewsChina Market DynamicsCustomer Survey of Home Page Usage (N=9,906)Cooperative Relationship DetailsCooperative Relationship DetailsPortalsRecruitment.comDealExclusivitySohuChina-HR.com 51Job.com Zhaopin.comShares .coms’ recruiter database Provides banner areas Count clicks to .coms Low or no charges to .comsNoNeteaseChina-HR.com 51Job.com CJOL.comShares .coms’ recruiter database Provides banner areas to .coms Highlights significant recruiters Count clicks to .coms Low or no charges to .comsNoYahoo ChinaChina-HR.com 51Job.com CJOL.com Zhaopin.comClassified advertisementNoSource: Bain Phone InterviewsChina Market DynamicsNo competitor has locked up exclusive portal relationships.Profile: Key PortalsProfile: Key PortalsSource: Web Site SearchPortalsBusinessEstablishmentPage View (a day)Recruitment Com. PartnershipRecruitment ServiceRankingsSina.comSohu.