Contents. About Gambit

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2 Contents Contents Page About Gambit Executive Summary 3 Human Capital Analysis of M&A Activity 4 Human Capital Sub-sector Trends 5 Human Capital Public Comparables 6 Established in 1992, Gambit is an independent corporate finance advisory firm specialising in advising private and public companies on midmarket transactions in the UK and overseas. With offices in London and Cardiff, Gambit is widely recognised as a market leader in M&A advice in the Human Capital sector having built up detailed industry knowledge and an enviable track record in deal origination and execution

0% compared with the same period in 2015 We are seeing a positive re-alignment in the markets as sentiment and appetite improve going into Q4 and we expect to see this lead to a strengthening of M&A

3 Executive Summary Simon Marsden Director, Human Capital In Summary Global transaction volumes in Q3 decreased by 17.0% quarter-on quarter and 60% year-on-year, though this was in contrast to UK activity which saw transaction levels up 36.0% compared with the same period in 2015 We are seeing a positive re-alignment in the markets as sentiment and appetite improve going into Q4 and we expect to see this lead to a strengthening of M&A activity going into 2017 Sub-sector activity in Q was strong in General Staffing and Engineering with appetite lower for Online, Healthcare and Executive Search assets Activity involving a US buyer/target dropped by 38% during the quarter while the Middle East and Asia witnessed a 100% increase in activity which augurs well for business owners with a presence in these markets looking to realise value Strategic buyers remained the most active purchasers with financial buyers accounting for 15% less activity than in the previous quarter Public valuations and multiples recovered during the period as markets stabilised in the aftermath of Brexit buoyed by the rebounding stock market and the positive impact from falling exchange rates on overseas reported earnings For the second time this year the markets are dealing with an unexpected political decision which will create a period of uncertainty in the markets. Overall this quarter we saw transaction volumes drop 17% as the UK markets recovered from the shock of the Brexit vote. A fall in activity in US is the main driver for the decrease in overall deal volumes with a reduction of 38% on the previous quarter. Fundamentals remain strong with low interest rates and cash availability amongst corporates and private equity investors, providing benign conditions to undertake M&A activity. The UK continues to be an attractive country to invest in as shown by the year-on-year increase in volume of deals. In the five months since the EU referendum the markets have stabilised and confidence appears to be returning in the market. There will undoubtedly be some uncertainty throughout the next two years of negotiations but sentiment now appears to be very much business as usual. Now that corporates have had time to re-evaluate strategy we anticipate that M&A activity will return to normalised levels and remain relatively stable. -3-

Human Capital Analysis of M&A Activity Geraint Rowe Partner, Human Capital The decline in global transaction activity in Q3 reflects a decline in activity from the US as corporates and financial

4 Human Capital Analysis of M&A Activity Geraint Rowe Partner, Human Capital The decline in global transaction activity in Q3 reflects a decline in activity from the US as corporates and financial buyers put M&A activity on hold due to concerns in the lead up to the US Presidential election Overseas buyers from the US were less active than anticipated given the devaluation in the pound immediately following the Brexit vote with buyers from the Middle East, Asia and Europe more active and are expected to continue to be interested in UK assets Whilst uncertainty exists in the post Brexit and US election aftermath we anticipate that this will be relatively short lived as underlying fundamentals remain strong. Buyers will continue to seek high quality assets and there remains a shortage of sellers in the market Given the unexpected result of the US Presidential election we expect some uncertainty to prevail for the short term but for M&A activity to increase in the medium-long term provided the new President delivers on election promises to drive economic growth. For US investors the UK remains an attractive place to undertake M&A and we expect US investors will continue to seek acquisitions in the UK Considering the increase witnessed in EV/EBITDA multiples in the quarter, it would appear that any disruption from Brexit has not been as destructive as first anticipated. The Prime Minister s recent announcement that Article 50 will be triggered by March 2017 removed some timing uncertainties. However the current legal challenge surrounding the mechanism for triggering Article 50 and the unknown complexities of exiting the EU is likely to cause some further turbulence in the market We believe that M&A activity will return to normalised levels during Q The positioning of the market in its cycle supports this and we anticipate a rebound in activity into early 2017 as cash rich corporates take advantage of available opportunities to increase growth potential and, for public companies, improve market ratings As expected deal volumes continued to be suppressed in Q3 with any recovery somewhat countered by the uncertainty in the lead up to the US Presidential election. While we expect that the result of the US election may affect M&A globally in the next quarter, we anticipate that this will be a short term issue that will subside early in If President-Elect Trump follows through on election promises of delivering high growth rates and investment this will result in an increase in outward investment from the US with a consequential impact on confidence and M&A activity. Closer to home the current legal challenge surrounding the triggering of Article 50 is counteracting the Government s attempts at Brexit transparency and may become a dampener to the recent confidence felt in the market if it is prolonged. Despite this, underlying business confidence in the market currently is allowing companies to create long-term strategic plans, very much including M&A activity as part of a wider business strategy -4-

Deal Volume Human Capital Sub-sector Trends 33% 8% 50 45 40 35 30 25 20 15 10 Q4-2015 Q1-2016 Q2-2016 Q3-2016 Executive Search Executive search

Executive search has previously remained resilient to economic tightening as when the economy contracts this leads to changes in leadership teams.

Manpower making acquisitions this quarter.

activity within the online sector was witnessed in the quarter although financial buyers remained active in the sector still accounting for 37% of

Buyers are still seeking high quality assets in online recruitment platforms and software but the uncertainty around the lead up to the US

environments in both countries are more stable.

5 Deal Volume Human Capital Sub-sector Trends 33% 8% Q Q Q Q Executive Search Executive search remains dominated by strategic buyers, many of which are headquartered in the US. Executive search has previously remained resilient to economic tightening as when the economy contracts this leads to changes in leadership teams. In the aftermath of the outcome of the Presidential election executive search companies will likely remain an attractive acquisition target for strategic purchasers. 29% 17% 5 0 General Staffing 6% HRO & RPO Online Professional Executive Search 34% General Staffing Transactions within general staffing increased in volume. There was a significant amount of activity emanating from Europe as M&A plans that may have been put on hold leading up to the EU referendum were completed. A large majority of the deals within general staffing were of particular strategic importance with some large players in the market including Manpower making acquisitions this quarter. = % growth Q to Q = % of transactions Q Healthcare IT Training Engineering Energy 56% 8% Online A significant decrease of 56% in activity within the online sector was witnessed in the quarter although financial buyers remained active in the sector still accounting for 37% of transactions. Buyers are still seeking high quality assets in online recruitment platforms and software but the uncertainty around the lead up to the US Presidential election and the immediate aftermath of Brexit could mean that financial buyers are holding off on activity until the political environments in both countries are more stable. HRO & RPO HRO & RPO continues to be an active subsector and was particularly buoyant within Europe this quarter. Strategic buyers dominated activity within the sector and notably a large majority of the deals were domestic. The HRO & RPO market is expected to grow at a CAGR of 12% by 2020 and so high quality assets within this subsector are likely to be attractive to buyers, particularly those looking to improve market ratings. 10% 9% Healthcare The fundamentals of the US Healthcare subsector still remain strong with both US targets and buyers accounting for a significant amount of activity within the subsector. We anticipate that, given the amount of activity the US generates in this subsector, we will witness some disruption into early 2017 given the outcome of the US Presidential election. It appears likely that President-Elect Trump s policies will lead to cuts in Medicare funding which may make European assets more attractive for US buyers. -5-

6 Share Price % Change Human Capital Public Comparables Valuation Multiples Public EV/EBITDA multiples tracked in the Gambit HC Index recovered slightly through the quarter as markets stabilised following the turbulence in the aftermath of the Brexit vote. Public market multiples remain at levels similar to those in early Companies that performed well in Q include Randstad, following its acquisition of Obiettivo Lavoro SRL and Robert Walters which issued a strong set of half-year results supported by a revenue increase of 20%. With companies seeing falls in EV / EBITDA valuation multiples and insufficient organic growth opportunities we expect to see greater focus on M&A activity. Company Name EV/EBITDA Q Q Q Q Adecco S.A. (SWX) 10.3x 9.4x 7.6x 8.7x Brunel International NV (ENXTAM) 11.6x 13.3x 12.3x 12.6x CPL Resources PLC (ISE) 10.0x 10.3x 9.1x 8.8x Empresaria Group PLC (AIM) 7.3x 5.8x 5.0x 7.1x Harvey Nash Group PLC (LSE) 7.6x 6.2x 3.6x 5.1x Hays PLC (LSE) 12.2x 10.3x 8.4x 6.3x Impellam Group PLC (AIM) 8.5x 10.0x 7.5x 7.8x Interquest Group PLC (AIM) 6.6x 6.7x 4.3x 5.5x ManpowerGroup Inc (NYSE) 8.3x 7.6x 5.9x 6.7x Matchtech Group PLC (AIM) 10.0x 8.2x 5.5x 6.4x Michael Page International PLC (LSE) 14.3x 12.1x 7.9x 9.3x Prime People PLC (AIM) 7.0x 4.6x 4.2x 4.6x Randstad Holding NV (ENXTAM) 12.5x 10.4x 7.5x 9.1x Robert Half International Inc (NYSE) 9.3x 9.0x 7.3x 7.3x Robert Walters PLC (LSE) 9.4x 7.7x 6.3x 9.3x Staffline Group PLC (AIM) 16.6x 12.2x 6.6x 6.7x SThree PLC (LSE) 9.9x 9.0x 6.9x 7.2x USG People NV (ENXTAM) 15.4x 14.8x 16.4x 16.6x Gambit Human Capital Index 10.3x 9.3x 7.4x 8.2x Share Prices The UK bias within the Gambit HC Index saw the index recover in line with the FTSE All Share and FTSE Support Services indices as the market returned to pre Brexit levels. During the quarter the Gambit HC Index rose 11.2% and the FTSE All Share and Support Service indices closed 6.8% and 10.5% higher respectively. We have already seen significant stabilising in share prices since the EU referendum and we expect this to continue. The aftermath of the result of the US Presidential election may affect share prices going forward, though early signs indicate that the markets have reacted robustly. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Outlook for M&A Activity It is likely that we will see corporates continue to target acquisition activity to deploy surplus cash, enhance market ratings and satisfy growth objectives. UK targets will be increasingly attractive to overseas acquirers particularly in the Middle East, Asia and Europe who can take advantage of favourable exchange rates. The uncertainty that remains in the US may result in decreased activity in the short term but we anticipate that this will subside by early to mid Gambit HC Index FTSE All Share FTSE Support Services Gambit HC EV/EBITDA 0% 0.0x 12/ / / / / / / / / / / / / / / / x 14.0x 12.0x 10.0x 8.0x 6.0x 4.0x 2.0x EV/EBITDA Multiple -6-

Gambit Corporate Finance LLP Established in 1992, Gambit is an independent corporate finance advisory firm specialising in advising private and public companies on mid-market transactions in the UK

7 Gambit Corporate Finance LLP Established in 1992, Gambit is an independent corporate finance advisory firm specialising in advising private and public companies on mid-market transactions in the UK and overseas. With offices in London and Cardiff, Gambit is widely recognised as a market leader in M&A advice in the Human Capital sector having built up detailed industry knowledge and an enviable track record in deal origination and execution. Key services include: Management Buy-outs/ Buy-ins Mergers and Acquisitions Fundraising/ Development Capital Financial Restructuring Private Equity Portfolio Advisory Succession Planning Refinancing CFI Group We are the sole UK representative of Corporate Finance International, a global partnership of leading mid-market investment banking firms with members in North America, Western & Eastern Europe and Asia. With over 260 professionals located in 32 offices throughout the world we are able to provide an international outlook and service for clients. Website: Contacts Geraint Rowe Simon Marsden Partner, Human Capital Director, Human Capital +44 (0) (0) geraint.rowe@gambitcf.com simon.marsden@gambitcf.com Sam Forman Executive, Human Capital samuel.forman@gambitcf.com Tel: +44 (0) Website:

Contents. Gambit Corporate Finance. Corporate Finance International. Executive Summary 3. Human Capital M&A Activity Analysis 4

Contents. Gambit Corporate Finance. Corporate Finance International. Executive Summary 3. Human Capital M&A Activity Analysis 4 Contents Contents Page Executive Summary 3 Human Capital M&A Activity Analysis 4 Human Capital Regional M&A Activity 5 Human Capital Sub-sector Trends 6 Human Capital Public Comparables 7 Gambit Corporate