Acg Cup

IT Staffing Inc.
Historical Balance Sheet

($ in millions)
Fiscal Year Ended December 31,

2009
2010
2011
Actual
Actual
Actual
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, net
Other current assets
Total current assets
LONG-TERM ASSETS
Fixed assets, net
Other assets
Total long-term assets
8.7
23.1
0.4
32.2
1.6
0.5
2.0
Total assets
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Accrued payroll
Total current liabilities
19.2
25.6
4.5
49.3
1.9
0.6
2.5
36.6 Added back the 2 years of Dividends

34.2
3.7
74.5
2.3
0.6
2.9
34.3
51.8
77.4
3.3
0.7
2.5
6.5
2.3
0.5
3.5
6.3
3.0
0.7
4.3
8.1
LONG-TERM LIABILITIES
Other liabilities
Total long-term liabilities
0.2
0.2
0.2
0.2
0.3
0.3
Total liabilities
6.7
6.6
Shareholders' equity
27.5
45.2
69.1 Added back the 2 years of Dividends
34.3
51.8
77.4
Total liabilities & shareholders' equity

$
Profit Margin
Asset Turnover
Equity Multiplier
ROE
D/E
1-Tax
Unlevered Beta
Levered Beta
8.4
0.115223937
2.625369116
1.120918519
0.339083866
0.107874495
0.625
1.29
1.37871447
he 2 years of Dividends
he 2 years of Dividends
IT Staffing Inc. Historical and Projected Income S

24.2%
($ in millions)
Fiscal Year Ended

2009
Actual
Revenue
% Growth
Direct costs of services

Gross profit
Gross margin
Selling, general and administrative expenses (Includes

additional 700k for Officers' Salaries
Depreciation and amortization
Operating income
Operating Margin
Interest expense (income)

Cash Interest Rate
Earnings before taxes
Tax expense (1)
$
Tax =
$
2011
Actual
131.8 $
3.9%
161.2 $
22.3%
203.3
26.1%
91.4
40.4 $
30.7%
105.1
56.1 $
34.8%
129.0
74.3
36.6%
23.2
17.6%
0.3
16.9 $
12.9%
28.1
17.4%
0.4
27.5 $
17.1%
36.4
17.9%
0.5
37.4
18.4%
(0.0)
0.5%
17.0
Net income
Supplemental Items
EBITDA
Capex
2010
Actual
6.37
10.6
(0.0)
0.4%
27.6
$
37.5%
17.26 $
0.8
10.34
17.2
(0.0)
0.3%
37.5
$
37.5%
27.95 $
0.7
14.06
23.4
37.5%
37.94
0.8
(1) Projected tax rate @ 40%
EBIT
EBIT Growth
EBIT/Rev
NI/Rev
EBITDA Growth
NI Growth
16.9
12.855%
8.049%
27.5
62.556%
17.086%
10.691%
61.963%
62.439%
37.4
35.935%
18.418%
11.522%
35.730%
35.911%
ojected Income Statements

2012
2013
2014
Projected
Projected
Projected
$
2015
Projected
235.8 $
16.0%
259.9 $
10.2%
280.8 $
8.1%
299.3
6.6%
150.2
85.6 $
36.3%
166.6
93.3 $
35.9%
178.6
102.2 $
36.4%
189.4
109.8
36.7%
42.0
17.8%
0.6
43.0 $
18.3%
47.3
18.2%
0.6
45.4 $
17.5%
52.2
18.6%
0.7
49.3 $
17.6%
56.9
19.0%
0.7
52.2
17.5%
(0.1)
0.3%
43.1
(0.1)
0.3%
45.4
(0.1)
0.3%
49.4
(0.2)
0.3%
52.4
17.2
25.9
18.2
27.3
19.8
29.7
21.0
31.4
43.6
1.0
2 Year CAGR
49.246%
48.847%
49.175%
46.0
1.1
50.0
1.2
53.0
1.3
Weighted Average Cost of C

($ in millions)
Preferred
Stock
Debt
Hudson Highland Group Inc.
Kforce Inc.
Randstad Holding NV
Robert Half International Inc.
Robert Walters plc
7.7
61.1
2,319.0
1.7
18.8
Median
Mean

Kforce Inc.
Randstad Holding NV
Robert Walters plc
Median
Mean
18.79
481.65
CAPM =Rf +B (MRP)
Levered
Beta
1.69
1.53
1.32
1.45
0.96
Unlevered
Beta
1.64
1.42
1.04
1.45
0.91
1.45
1.39
1.42
1.29
Market Assumptions
Risk Free Rate
Equity Risk Premium
Tax Rate
4.50%
5.75%
40.0%
4.75%
6.75%
11.93%
10.64%
13.22%
ted Average Cost of Capital

Market Value
of Equity
154.0
472.2
5,133.8
3,782.4
223.3
$
472.20
1,953.14
Equity Risk
Premium
5.75%
5.75%
5.75%
5.75%
5.75%
Total
Capitalization
161.7
533.3
7,452.8
3,784.1
242.1
$
533.34
2,434.79
Size Risk
Premium
4.45%
2.49%
0.85%
0.85%
2.85%
Debt
to Equity
5.0%
12.9%
45.2%
0.0%
8.4%
Debt to
Total
Capitalization
4.7%
11.5%
31.1%
0.0%
7.8%
Preferred to
Total
Capitalization
0.0%
0.0%
0.0%
0.0%
0.0%
Equity to
Total
Capitalization
95.3%
88.5%
68.9%
100.0%
92.2%
8.4%
14.3%
7.8%
11.0%
0.0%
0.0%
92.2%
89.0%
6.3%
3.0%
2.8%
9.0%
6.3%
Cost of
Preferred
0.0%
0.0%
0.0%
0.0%
0.0%
WACC
18.0%
14.2%
9.5%
13.7%
12.2%
6.3%
5.5%
0.0%
0.0%
13.7%
13.5%
Cost of
Equity
18.7%
15.8%
13.0%
13.7%
12.9%
13.7%
14.8%
Cost of
Debt
Free Cash Flow Valuation Downside

($ in millions)
Fiscal Year E
2009
Actual
Revenue
% Growth

Gross profit
Gross margin
Selling, general and administrative expenses

Operating income
Operating Margin

Cash Interest Rate
Tax expense (1)
Net income
Supplemental Items
EBITDA
Capex
$
Tax =
$

(1) Discount Rate (Rf + B(MRP))
11.93%
2010
Actual
131.8 $
3.9%
161.2
22.3%
91.4
40.4 $
30.7%
105.1
56.1
34.8%
23.2
17.6%
0.3
16.95 $
12.9%
28.1
17.4%
0.4
27.55
17.1%
(0.0)
0.5%
17.0
(0.0)
0.4%
27.6
6.4
10.6
10.3
17.2
37.5%
17.26 $
0.8
10.64%
Income Approach
13.22%
2009
DCF Method
EBIT
Taxes Rate
Taxes
NOPAT
NOA (Total Assets)-(Total Liabilities-Total Debt)
Increase in NOA
FCFF
37.5%
27.95
0.7
2010
16.95
37.5%
6.35
10.59
27.55
27.55
37.5%
10.33
17.22
45.22
17.67
(0.46)
CAPM
11.93% Free Cash Flow Growth
ITS Terminal Value
2%
227.33
3%
255.27
4%
290.27
ITS Enterprise Value
201.26
219.06
241.36
Multiple to 2011 Rev

Multiple to 2011 EBITDA
Multiple to 2011 EBIT
1.0
5.3
5.4
1.1
5.8
5.9
1.2
6.4
6.4
Multiple to 2011 NI
10.64% Free Cash Flow Growth Post 2015
ITS Terminal Value
8.6
9.4
2%
261.19
3%
298.27
4%
346.52
232.40
257.15
289.35
1.1
6.1
6.2
9.9
10.3

Multiple to 2011 NI
ITS Terminal Value
2%
201.13
3%
222.97
4%
249.56
177.19
190.48
206.66

Multiple to 2011 NI
1.3
6.8
6.9
11.0
0.9
4.7
4.7
7.6
1.4
7.6
7.7
12.4
0.9
5.0
5.1
8.1
1.0
5.4
5.5
8.8
Operating Income Based Valuation

CAPM
2009
11.93%
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
16.95
10.59
27.55
2010
$
$
$
$
2009
10.64%
16.95
10.59
27.55
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
CAPM
11.93% Growth Rate
Terminal ROPI
PV of Terminal ROPI

10.64% Growth Rate
Terminal ROPI
PV of Terminal ROPI
$
$
$
$
$
$
$
$
16.95
10.59
27.55
$
$
$
$
2%
18.17 $
140.31 $
208.97
27.55
17.22
45.22
14.29
27.55
17.22
45.22
13.57
$
$
$
$
$
3%
18.34 $
160.23 $
228.89
37.44
23.40
69.08
18.59
18.59
2011
3%
17.10 $
122.01 $
190.67
37.44
23.40
69.08
18.01
18.01
2011
$
$
$
$
$
2010
2%
16.94 $
108.66 $
177.32
2011
$
$
$
$
$
2010
$
$
$
$
2009
13.22%
27.55
17.22
45.22
13.93
37.44
23.40
69.08
17.43
17.43
4%
17.27
138.73
207.39
4%
18.52
186.15
254.81
13.22% Growth Rate

Terminal ROPI
PV of Terminal ROPI
$
$
2%
15.71 $
85.22 $
153.88
3%
15.87 $
94.48 $
163.14
4%
16.02
105.74
174.40
uation Downside
2011
2012
2013
Actual
Projected
Projected
$
2014
Projected
2015
Projected
203.3 $
26.1%
233.8 $
15.0%
254.8 $
9.0%
273.9 $
7.5%
290.4
6.0%
129.0
74.3 $
36.6%
149.6
84.17 $
36.0%
164.6
90.21 $
35.4%
178.1
95.88 $
35.0%
190.2
100.18
34.5%
36.4
17.9%
0.5
37.44 $
18.4%
42.1
18.0%
0.6
41.48 $
17.7%
46.1
18.1%
0.7
43.39 $
17.0%
49.9
18.2%
0.8
45.22 $
16.5%
53.1
18.3%
0.9
46.18
15.9%
(0.0)
0.3%
37.5
(0.1)
0.3%
41.5
(0.1)
0.3%
43.5
(0.1)
0.3%
45.4
(0.2)
0.3%
46.4
14.1
23.4
16.6
24.9
17.4
26.1
18.1
27.2
18.5
27.8
37.5%
37.94 $
0.8
2011
40.0%
42.08 $
1.0
2012
37.44
37.5%
14.04
23.40
69.08
23.86
(0.46)
40.0%
44.09 $
1.2
2013
41.48
40.0%
16.59
24.89
79.45
10.36
14.53
5%
335.36
6%
395.68
270.10
308.53
1.3
7.1
7.2
1.5
8.1
8.2
Projected
43.39
40.0%
17.35
26.03
86.60
7.15
18.88
40.0%
46.02 $
1.3
2014
45.22
40.0%
18.09
27.13
93.09
6.49
20.64
40.0%
47.04
1.4
2015
46.18
40.0%
18.47
27.71
98.68
5.59
22.12
11.5
13.2
5%
411.88
6%
505.42
332.97
395.39
1.6
8.8
8.9
14.2
1.9
10.4
10.6
16.9
5%
282.61
6%
324.81
226.77
252.46
1.1
6.0
6.1
9.7
1.2
6.7
6.7
10.8
2012
$
$
$
$
$
41.48
24.89
79.45
16.65
14.87
2013
$
$
$
$
$
2012
$
$
$
$
$
41.48
24.89
79.45
17.54
15.86
$
$
$
$
$
41.48
24.89
79.45
15.76
13.92
$
$
$
$
$
5%
18.70 $
221.26 $
289.92
43.39
26.03
86.60
17.58
14.36
43.39
26.03
86.60
15.53
12.12
6%
17.60
189.09
257.75
6%
18.88
271.51
340.17
45.22
27.13
93.09
16.80
11.98
2015
$
$
$
$
$
$
2014
$
$
$
$
$
2013
5%
17.43 $
160.28 $
228.94
2014
$
$
$
$
$
2013
$
$
$
$
$
2012
$
$
$
$
$
43.39
26.03
86.60
16.55
13.21
45.22
27.13
93.09
17.92
13.24
2015
$
$
$
$
$
$
2014
$
$
$
$
$
45.22
27.13
93.09
15.69
10.81
46.18
27.71
98.68
16.60
10.58
68.66
46.18
27.71
98.68
17.81
11.89
73.94
2015
$
$
$
$
$
$
46.18
27.71
98.68
15.40
9.38
63.64
$
$
5%
16.17 $
119.75 $
188.41
6%
16.33
137.63
206.29
Free Cash Flow Valuation

($ in millions)
Fiscal Year E
2009
Actual
Revenue
% Growth

Gross profit
Gross margin

Operating income
Operating Margin

Cash Interest Rate
Tax expense (1)
131.8 $
3.9%
161.2
22.3%
91.4
40.4 $
30.7%
105.1
56.1
34.8%
23.2
17.6%
0.3
16.95 $
12.9%
28.1
17.4%
0.4
27.55
17.1%
(0.0)
0.5%
17.0
Net income
Supplemental Items
EBITDA
Capex
2010
Actual
$
Tax =
$

11.93%
6.37
10.6
(0.0)
0.4%
27.6
$
37.5%
17.26 $
0.8
10.64%
Income Approach
37.5%
27.95
0.7
13.22%
2009
DCF Method 1
EBIT
Taxes Rate
Taxes
NOPAT
Increase in NOA
FCFF
10.34
17.2
2010
16.95
37.5%
6.35
10.59
27.55
27.55
37.5%
10.33
17.22
45.22
17.67
(0.46)
CAPM
ITS Terminal Value
2%
257.63
3%
289.30
4%
328.96
224.09
244.27
269.54

1.1
5.9
6.0
1.2
6.4
6.5
1.3
7.1
7.2
Multiple to 2011 NI
ITS Terminal Value
9.6
$
2%
296.01
3%
338.03
4%
392.72
259.30
287.34
323.84

Multiple to 2011 NI
ITS Terminal Value
1.3
6.8
6.9
11.1
2%
227.94
196.89

Multiple to 2011 NI
10.4
11.5
1.4
7.6
7.7
12.3
1.6
8.5
8.6
13.8
3%
252.70
4%
282.82
211.95
230.29
1.0
5.2
5.3
8.4
1.0
5.6
5.7
9.0
1.1
6.1
6.2
9.8

CAPM
2009
11.93%
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
2010
16.95
10.59
27.55
$
$
$
$
2009
10.64%
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
CAPM
11.93% Growth Rate
Terminal ROPI
PV of Terminal ROPI

10.64% Growth Rate
Terminal ROPI
PV of Terminal ROPI

13.22% Growth Rate
$
$
$
$
$
$
$
$
27.55
17.22
45.22
13.93
$
$
$
$
$
2010
16.95
10.59
27.55
$
$
$
$
2009
13.22%
2011
2011
27.55
17.22
45.22
14.29
$
$
$
$
$
2010
16.95
10.59
27.55
$
$
$
$
2%
20.36 $
130.60 $
204.72
2%
21.61 $
166.94 $
246.55
2%
37.44
23.40
69.08
18.01
18.01
37.44
23.40
69.08
18.59
18.59
2011
27.55
17.22
45.22
13.57
$
$
$
$
$
3%
20.56 $
146.65 $
220.76
3%
21.82 $
190.64 $
270.25
3%
37.44
23.40
69.08
17.43
17.43
4%
20.75
166.75
240.86
4%
22.04
221.48
301.09
4%
Terminal ROPI
PV of Terminal ROPI
$
$
19.10
103.59
$
$
19.29
114.84
$
$
19.47
128.53
172.46
183.71
197.40
Valuation
2011
2012
2013
Actual
Projected
Projected
$
2015
Projected
203.3 $
26.1%
235.8 $
16.0%
259.9 $
10.2%
280.8 $
8.1%
299.3
6.6%
129.0
74.3 $
36.6%
150.2
85.6 $
36.3%
166.6
93.3 $
35.9%
178.6
102.2 $
36.4%
189.4
109.8
36.7%
36.4
17.9%
0.5
37.44 $
18.4%
42.0
17.8%
0.6
43.04 $
18.3%
47.3
18.2%
0.6
45.36 $
17.5%
52.2
18.6%
0.7
49.29 $
17.6%
56.9
19.0%
0.7
52.23
17.5%
(0.0)
0.3%
37.5
$
2014
Projected
14.06
23.4
37.5%
37.94 $
0.8
2011
(0.1)
0.3%
43.1
(0.1)
0.3%
45.4
(0.1)
0.3%
49.4
(0.2)
0.3%
52.4
17.2
25.9
18.2
27.3
19.8
29.7
21.0
31.4
40.0%
43.6 $
1.0
2012
37.44
37.5%
14.04
23.40
69.08
23.86
(0.46)
40.0%
46.0 $
1.1
2013
43.04
40.0%
17.22
25.83
80.14
11.05
14.77
5%
380.07
6%
448.43
302.10
345.66
1.5
8.0
8.1
1.7
9.1
9.2
Projected
45.36
40.0%
18.14
27.21
88.31
8.18
19.04
40.0%
50.0 $
1.2
2014
49.29
40.0%
19.72
29.58
95.43
7.12
22.46
40.0%
53.0
1.3
2015
52.23
40.0%
20.89
31.34
101.70
6.27
25.07
12.9
14.8
5%
466.79
6%
572.80
373.27
444.01
1.8
9.8
10.0
15.9
2.2
11.7
11.9
19.0
5%
320.28
6%
368.11
253.08
282.19
1.2
6.7
6.8
10.8
1.4
7.4
7.5
12.0
2012
$
$
$
$
$
2013
43.04
25.83
80.14
17.59
15.71
$
$
$
$
$
2012
$
$
$
$
$
$
$
$
$
$
45.36
27.21
88.31
17.66
14.09
$
$
$
$
$
2013
43.04
25.83
80.14
18.48
16.70
$
$
$
$
$
2012
$
$
$
$
$
2014
$
$
$
$
$
5%
20.95 $
192.64 $
266.76
5%
22.25 $
263.25 $
342.87
5%
$
$
$
$
$
$
2014
45.36
27.21
88.31
18.69
15.27
$
$
$
$
$
2013
43.04
25.83
80.14
16.69
14.75
49.29
29.58
95.43
19.04
13.58
2015
49.29
29.58
95.43
20.18
14.90
2015
$
$
$
$
$
$
2014
45.36
27.21
88.31
16.62
12.97
6%
21.15
227.27
301.39
6%
22.46
323.04
402.65
6%
$
$
$
$
$
49.29
29.58
95.43
17.90
12.34
52.23
31.34
101.70
19.96
12.72
74.11
52.23
31.34
101.70
21.19
14.14
79.61
2015
$
$
$
$
$
$
52.23
31.34
101.70
18.72
11.40
68.87
$
$
19.66
145.55
$
$
19.85
167.29
214.42
236.16
Free Cash Flow Valuation Upside

($ in millions)
Fiscal Year E
2009
Actual
Revenue
% Growth

Gross profit
Gross margin

Operating income
Operating Margin

Cash Interest Rate
Tax expense (1)
Net income
Supplemental Items
EBITDA
Capex
$
Tax =
$

11.93%
2010
Actual
131.8 $
3.9%
161.2
22.3%
91.4
40.4 $
30.7%
105.1
56.1
34.8%
23.2
17.6%
0.3
16.95 $
12.9%
28.1
17.4%
0.4
27.55
17.1%
(0.0)
0.5%
17.0
(0.0)
0.4%
27.6
6.4
10.6
10.3
17.2
37.5%
17.26 $
0.8
10.64%
Income Approach
13.22%
2009
DCF Valuation
EBIT
Taxes Rate
Taxes
NOPAT
Increase in NOA
FCFF
37.5%
27.95
0.7
2010
16.95
37.5%
6.35
10.59
27.55
27.55
37.5%
10.33
17.22
45.22
17.67
(0.46)
CAPM
11.93% Free Cash Flow Growth
ITS Terminal Value
2%
271.04
3%
304.36
4%
346.08
230.18
251.41
277.99

1.1
6.1
6.1
1.2
6.6
6.7
1.4
7.3
7.4
Multiple to 2011 NI
ITS Terminal Value
9.8
$
2%
311.58
3%
355.85
4%
413.45
267.26
296.80
335.25

Multiple to 2011 NI
ITS Terminal Value
1.3
7.0
7.1
11.4
2%
239.83
3%
265.89
4%
297.59
201.71
217.57
236.86

Multiple to 2011 NI
10.7
11.9
1.5
7.8
7.9
12.7
1.0
5.3
5.4
8.6
1.6
8.8
9.0
14.3
1.1
5.7
5.8
9.3
1.2
6.2
6.3
10.1

CAPM
2009
11.93%
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
$
$
$
16.95
10.59
27.55
2010
$
$
$
$
2009
10.64%
16.95
10.59
27.55
EBIT
NOPAT
NOA
ROPI
PV(ROPI)
PV of Horizon ROPI
CAPM
11.93% Growth Rate
Terminal ROPI
PV of Terminal ROPI

10.64% Growth Rate
Terminal ROPI
PV of Terminal ROPI
$
$
$
$
$
$
$
$
16.95
10.59
27.55
$
$
$
$
2%
34.59 $
267.16 $
377.80
27.55
17.22
45.22
14.29
27.55
17.22
45.22
13.57
$
$
$
$
$
3%
34.93 $
305.09 $
415.73
37.44
23.40
69.08
18.59
18.59
2011
3%
33.35 $
237.96 $
348.59
37.44
23.40
69.08
18.01
18.01
2011
$
$
$
$
$
2010
2%
33.03 $
211.92 $
322.55
$
$
$
$
$
2010
$
$
$
$
2009
13.22%
27.55
17.22
45.22
13.93
2011
37.44
23.40
69.08
17.43
17.43
4%
33.68
270.57
381.20
4%
35.27
354.45
465.08
13.22% Growth Rate

Terminal ROPI
PV of Terminal ROPI
$
$
2%
31.47 $
170.70 $
281.33
3%
31.78 $
189.23 $
299.87
4%
32.09
211.80
322.43
luation Upside
2011
2012
2013
Actual
Projected
Projected
$
2014
Projected
2015
Projected
203.3 $
26.1%
248.0 $
22.0%
295.2 $
19.0%
348.3 $
18.0%
407.5
17.0%
129.0
74.3 $
36.6%
156.3
91.77 $
37.0%
185.9
109.21 $
37.0%
219.4
128.86 $
37.0%
256.7
150.77
37.0%
36.4
17.9%
0.5
37.44 $
18.4%
44.1
17.8%
0.6
47.04 $
19.0%
52.5
17.8%
0.6
56.03 $
19.0%
62.0
17.8%
0.7
66.17 $
19.0%
72.5
17.8%
0.7
77.50
19.0%
(0.0)
0.3%
37.5
(0.1)
0.3%
47.1
(0.1)
0.3%
56.1
(0.1)
0.3%
66.3
(0.2)
0.3%
77.7
14.1
23.4
18.8
28.3
22.4
33.7
26.5
39.8
31.1
46.6
37.5%
37.94 $
0.8
2011
40.0%
47.62 $
1.0
2012
37.44
37.5%
14.04
23.40
69.08
23.86
(0.46)
40.0%
56.67 $
1.1
2013
47.04
40.0%
18.81
28.22
84.28
15.20
13.02
5%
399.85
6%
471.77
312.25
358.08
1.5
8.2
8.3
1.8
9.4
9.6
Projected
56.03
40.0%
22.41
33.62
100.30
16.01
17.60
40.0%
66.87 $
1.2
2014
66.17
40.0%
26.47
39.70
118.35
18.05
21.65
40.0%
78.24
1.3
2015
77.50
40.0%
31.00
46.50
138.47
20.12
26.38
13.3
15.3
5%
491.50
6%
603.23
387.34
461.92
1.9
10.2
10.3
16.5
2.3
12.2
12.3
19.7
5%
337.01
6%
387.35
260.85
291.49
1.3
6.9
7.0
11.1
1.4
7.7
7.8
12.4
2012
$
$
$
$
$
47.04
28.22
84.28
19.98
17.85
2013
$
$
$
$
$
2012
$
$
$
$
$
47.04
28.22
84.28
20.87
18.87
$
$
$
$
$
47.04
28.22
84.28
19.09
16.86
$
$
$
$
$
5%
35.61 $
421.31 $
531.94
56.03
33.62
100.30
24.65
20.14
56.03
33.62
100.30
22.47
17.53
6%
34.33
368.78
479.42
6%
35.95
516.99
627.62
66.17
39.70
118.35
27.74
24.79
2015
$
$
$
$
$
$
2014
$
$
$
$
$
2013
5%
34.00 $
312.59 $
423.22
$
$
$
$
$
2013
$
$
$
$
$
2012
$
$
$
$
$
56.03
33.62
100.30
23.56
21.05
2014
66.17
39.70
118.35
29.04
21.44
2015
$
$
$
$
$
$
2014
$
$
$
$
$
66.17
39.70
118.35
26.45
18.22
77.50
46.50
138.47
32.38
28.93
110.63
77.50
46.50
138.47
33.91
22.63
101.68
2015
$
$
$
$
$
$
77.50
46.50
138.47
30.85
18.78
88.82
$
$
5%
32.40 $
239.85 $
350.48
6%
32.70
275.67
386.30
Company Comparisons Valu

($ in millions)
Company
Kforce Inc.
Randstad Holding NV
Robert Walters plc
Min
Max
Median
Mean
LTM Operating Indications

Gross
Profit
EBITDA
EBIT
352.6
20.4
13.9
339.6
61.4
48.6
3,869.3
886.3
542.7
1,429.2
272.3
220.4
276.6
27.6
24.4
Revenue
930.1
1,083.9
21,163.9
3,655.1
766.1
13.9
542.7
48.6
170.0
$
$
$
$
8.8
448.7
26.4
126.4
37.9
37.4
23.4
Equity Value:
Kforce Inc.
Randstad Holding NV
Robert Walters plc
Shares
Stock Price Outstanding MV Equity
4.68
32.9 $
153.97
12.46
37.9 $
472.23
30.04
170.9 $ 5,133.84
26.45
143.0 $ 3,782.35
2.90
77.0 $
223.30
Debt
7.68
61.14
2,318.97
1.70
18.79
$
$
$
$
$
Cash
22.48
1.03
319.77
242.70
35.90
Multipliers:
Kforce Inc.
Randstad Holding NV
Robert Walters plc
Std Deviation
Min
Std Dev -1
Mean
Std Dev +1
Max
Return
EV/Sales EV/EBITDA EV/EBIT
on Equity
0.1496
6.831
10.018
9.3%
0.4912
8.665
10.963
11.1%
0.3370
8.048
13.143
12.0%
0.9689
13.005
16.064
16.1%
0.2691
7.468
8.456
17.3%
0.31874567 2.445308486 2.958906927 3.381445966
0.1496
6.831
8.456
9.336
0.1244
6.3579
8.7700
9.7954
0.4432
8.803
11.729
13.177
0.7619
11.2485
14.6878
16.5583
0.9689
13.005
16.064
17.303
ITS
ITS Valuation
Min
Std Dev -1
Mean
Std Dev +1
Max
Sum (min:max)
(Sum-Avg)^2
% of Sum of Row 49
1 - Row 50
Weight of Row 51 to Sum
$
766.1
$ 21,163.9
$ 1,083.9
$ 5,519.8
$
$
$
$
276.6
3,869.3
352.6
1,253.4
$
$
$
$
20.4
886.3
61.4
253.6
74.3
203.3
EV/Sales
30.42028
25.29557
90.09657
154.89756
196.97447
497.68445
3122664.76
0.35877677
0.64122323
21%
$
$
$
$
Net
Income
8.8
26.4
448.7
132.1
15.8
$
$
$
$
$
Return
EV/EBITDA EV/EBIT
on Equity
259.16146
316.64089
644.98915
241.21509
328.38506
676.69659
333.98838
439.17932
910.29797
426.76168
549.97358 1143.89936
493.40060
601.52075 1195.36875
1754.52721 2235.69960 4571.25183 2264.79077
260368.9013 846.2964563 5319762.613 8703642.567
0.029914935 9.72347E-05 0.611211062
1
0.970085065 0.999902765 0.388788938
3
32%
33%
13%
Enterprise
Value
$
139.17
$
532.35
$ 7,133.03
$ 3,541.35
$
206.19
ITS Valuation w/ Weights

Min
Std Dev -1
Mean
Std Dev +1
Max
Mean ITS Valuation =
6.50206247
5.40670325
19.2573375
33.1079717
42.101535
391.6065
83.80288769
77.99971931
107.9990477
137.9983761
159.5468499
105.5367001
109.4510424
146.3788714
183.3067005
200.4874215
83.58821626
87.69738261
117.9712608
148.2451391
154.9153831
279.4299
280.5548
391.6065
502.6582
557.0512
y Comparisons Valuation
LTM Margins
Gross
Profit
EBITDA
EBIT
37.9%
2.2%
1.5%
31.3%
5.7%
4.5%
18.3%
4.2%
2.6%
39.1%
7.4%
6.0%
36.1%
3.6%
3.2%
2-Year Compound Annual Growth Rate

Net
Income
0.9%
2.4%
2.1%
3.6%
2.1%
Revenues EBITDA
13.5%
NM
8.2%
18.1%
9.3%
28.3%
5.4%
24.1%
24.2%
44.9%
EBIT Net Income

NM
NM
30.5%
NM
50.3%
NM
41.7%
45.1%
61.9%
80.6%
Return
on Equity
9.3%
11.1%
12.0%
16.1%
17.3%
18.28%
39.10%
36.10%
32.55%
2.19%
7.45%
4.19%
4.62%
1.49%
6.03%
3.18%
3.55%
0.95%
3.61%
2.12%
2.23%
5.42%
24.21%
9.28%
12.11%
18.13%
44.94%
26.21%
28.87%
30.47%
61.92%
45.98%
46.08%
45.09%
80.65%
62.87%
62.87%
9.34%
17.30%
12.02%
13.18%
36.6%
18.66%
18.42%
11.52%
24.2%
48.8%
46.32%
49.18%
33.91%
Enterprise
Value
$
139.17
$
532.35
$ 7,133.03
$ 3,541.35
$
206.19
780666.19 65092.225 211.57411 1329940.7
Comparable Transactions
($ in millions)
Transaction
1
2
3
4
5
6
7
8
9
10
11
Standard Deviation
Low
High
Median
Mean
Valuations
EV/Revenue
Revenue
Implied Enterprise Value
Weight
EV/EBITDA
EBITDA
Implied Enterprise Value
Weight
Enterprise Value
EV/EBITDA
EV/Revenue
Target
Revenues
Enterprise Value
732.22
153.65
1157.86
83.50
162.44
71.79
128.60
1824.29
44.47
55.28
840.75
$
$
$
$
Low
44.5
1,824.3
153.7
477.7
EBITDA
2088.95
623.34
1742.60
806.79
1163.43
135.95
603.30
579.76
51.06
67.77
372.97
$
$
$
$
Mean
51.1
2,089.0
603.3
748.7
EV/Revenue
71.95
17.15
58.84
5.57
27.13
12.10
20.69
86.38
3.75
4.19
53.21
$
$
$
$
High
0.35
0.25
0.66
0.10
0.14
0.53
0.21
3.15
0.87
0.82
2.25
3.8 0.103496573
86.4 3.14662964
20.7 0.528061787
32.8 0.848478988
0.103496573
203.3
21.04085326
0.4
5.344219071
37.9393
202.7559306
0.6
0.848478988
203.3
172.4957783
0.5
12.17392155
37.9393
461.8700619
0.5
3.14662964
203.3
639.7098058
0.4
21.11935633
37.9393
801.2535957
0.6
130.0698997
317.1829201
736.6360797
3.428368464
0.639792915
8.360273387
1.560171766
19.41617478
3.623394391
EV/EBITDA EBITDA Margin

10.18
8.96
19.68
14.99
5.99
5.93
6.22
21.12
11.86
13.19
15.80
5.344219071
5.344219071
21.11935633
11.85866667
12.17392155
3.44%
2.75%
3.38%
0.69%
2.33%
8.90%
3.43%
14.90%
7.34%
6.18%
14.27%
0.69%
14.90%
3.44%
6.15%
Offers
($ in millions)
StaffCo
Purchase
Cash
StaffCo Equity
100%
220
140
Total Offer
Corporate Value Based on Offer
360
360
HGE
% 2013 EBITDA Estimate
Purchase
Cash
Term Loan Senior
Term Loan Subordinate
Cash Offer
Total Offer
Corporate Value Based on Offer
Debt =
80
100
40%
95
60
20
15
97.5
95
92.5
90
95
60
20
12.5
95
60
20
10
95
60
20
7.5
95
60
20
5
190
475
187.5
468.75
185
462.5
182.5
456.25
180
450
Owner's Share
48
142
355
139.5
348.75
137
342.5
134.5
336.25
132
330
87.5
85
95
60
20
2.5
95
60
20
0
177.5
443.75
175
437.5
129.5
323.75
127
317.5
Earnout Vesting Schedule

($ in millions)
% of Management
2013 EBITDA
Estimate
100.0%
97.5%
Low Projection 95.0%
92.5%
90.0%
87.5%
85.0%
Implied 2013
EBITDA
Achieved
$ Value
$46.0
$15.0
$44.9
$12.5
44.09
$10
$43.7
$42.6
$41.4
$10.0
$7.5
$5.0
$40.3
$39.1
$2.5
$0.0
Low
2013
Projected
$
254.8
9.0%
164.6
90.21
35.4%
46.1
18.1%
0.7
43.39
17.0%
(0.1)
0.3%
43.5
17.4
$
26.1
40.0%
$ 44.09
1.2
Mid
2013
Projected
$
259.9
10.2%
166.6
93.3
35.9%
47.3
18.2%
0.6
45.36
17.5%
(0.1)
0.3%
45.4
18.2
$
27.3
40.0%
46.0
1.1
New WACC After H G E Buyout

($ in millions)
2011
Actual
2012
Low
15%
Growth Rate
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, net
Other current assets
Total current assets
LONG-TERM ASSETS
Fixed assets, net
Goodwill
Other assets
Total long-term assets
Total assets
CURRENT LIABILITIES
Accounts payable
Accrued expenses
Accrued payroll
Total current liabilities
36.6
34.2
3.7
74.5
2.3
19%
0.6
2.9
19%
42.12
39.29
4.31
85.72
2012
Mid
16%
$
2.70
78.38
0.75
81.83
2012
High
21%
42.49
39.63
4.35
86.46
44.32
41.34
4.54
90.19
2.70
78.39
0.75
81.84
2.70
78.44
0.75
81.89
77.4
167.55
168.31
172.08
3.0
0.7
4.3
8.1
3.49
0.84
4.97
9.30
3.52
0.84
5.02
9.38
3.68
0.88
5.23
9.79
LONG-TERM LIABILITIES
Term Loan (LIBOR + 7)
Subordinate Loan (2% PIK)
Other liabilities
Total long-term liabilities
0.3
0.3
11%
60.00
20.40
0.29
80.70
60.00
20.40
0.29
80.70
60.00
20.40
0.29
80.70
90.48
Total liabilities
8.4
90.00
90.08
Shareholders' equity
59.1
77.55
78.23
81.60
Total liabilities & shareholders' equity
67.4
168.31
172.08
167.55
169.57116
167.55
(2.02)
170.316548
168.306407
(2.01)
174.04348
172.08272
(1.96)
D/E
1-Tax
1.160494
60%
1.1515238
60%
1.108897
60%
Levered Beta
2.1909364
2.18398488
2.1509508
CAPM
17.10%
17.06%
16.87%
Change in Goodwill
Tax Rate
RFR
Equity Risk Premium
Unlevered Beta
CAPM
40%
4.50%
5.75%
1.29
11.93%
Term Loan (LIBOR + 7) 8.50%
0.75
Subordinate Loan (2% PIK)

Cost (D)
D/V
E/V
WACC
14%
0.25
5.93%
47.99%
52.01%
5.93%
47.77%
52.23%
5.93%
46.72%
53.28%
11.736%
11.740%
11.755%
1 Month LIBOR Rate

3 Month LIBOR Rate
6 Month LIBOR Rate
1 Year LIBOR Rate
0.28
0.56
0.79
1.11

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IT Staffing Inc.

Historical Balance Sheet

Fiscal Year Ended December 31,

36.6 Added back the 2 years of Dividends

69.1 Added back the 2 years of Dividends

Total liabilities & shareholders' equity

IT Staffing Inc. Historical and Projected Income S

Fiscal Year Ended

Direct costs of services

Selling, general and administrative expenses (Includes

Interest expense (income)

(1) Projected tax rate @ 40%

ojected Income Statements

Weighted Average Cost of C

Hudson Highland Group Inc.

CAPM =Rf +B (MRP)

ted Average Cost of Capital

Free Cash Flow Valuation Downside

Direct costs of services

Selling, general and administrative expenses

Interest expense (income)

(1) Projected tax rate @ 40%

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

Operating Income Based Valuation

ITS Enterprise Value

ITS Enterprise Value

13.22% Growth Rate

ITS Enterprise Value

Free Cash Flow Valuation

Direct costs of services

Selling, general and administrative expenses

Interest expense (income)

(1) Projected tax rate @ 40%

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

Operating Income Based Valuation

ITS Enterprise Value

ITS Enterprise Value

ITS Enterprise Value

Free Cash Flow Valuation Upside

Direct costs of services

Selling, general and administrative expenses

Interest expense (income)

(1) Projected tax rate @ 40%

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

ITS Enterprise Value

Multiple to 2011 Rev

Operating Income Based Valuation

ITS Enterprise Value

ITS Enterprise Value