Leveraged Buyout                                                                     Acquisition Plan                     ...
Table of ContentsLEVERAGED BUYOUT PROPOSAL TRIGGER: ORGANIZATION PRESS RELEASE .......................................... ...
Net Purchase Price: .........................................................................................................
Leveraged Buyout Proposal Trigger: Organization Press Release        After experiencing a 59% decline ($16.84 to $6.94) in...
CAGR for the global recruitment market is expected to reach 6%. These figures are promising and representgrowth opportunit...
our findings for Monster Worldwide, Inc., our elected tier-one LBO candidate in this preliminary proposal report,and prese...
Objective II: LBO Target Search and Screening Process and Criteria: Financial Returns: The target firm should have:       ...
Monster Worldwide, Inc.              622 Third Avenue                      Employees: 6,000                     Financials...
Negotiation Strategy (determining synergy):        Negotiating strategic planning was already in force prior to the LBO ca...
The following deal structure outline provides additional detailed information pertaining to the LBOproposal process, as of...
   Hedge and Private Equity Fund Registration: Must register with SEC as investment advisors if assets ≥        $100; tho...
agency industry remains stagnant with regard to its growth rate and revenue, due to the lingering effects caused bythe 200...
Business Revenue Segmentation Regression Analysis: Null Hypothesis: Monster Worldw ide revenue is af f ected by [selected]...
GDP Growth - Quarter over Quarter (2007-2014)  15  10   5   0  -5 -10                          World            Advanced e...
Global Unemployment Rate (Select): 2000-2010                                                                              ...
1.3 Competition:        A formal SWOT analysis executed by our LBO financial team has concluded that market competition fo...
Salvatore Iannuzzi                                              Chairman of the Board,                                    ...
Lise Poulos                  Lise Poulos, has been Executive Vice President and Chief Administrative Officer of           ...
9.1 Capitalization of Monster Worldwide, Inc.:       The authorized capital stock of Monster Worldwide, Inc. consists of 1...
2011      EVA     =          NOPAT                -            Operating Capital               Weighted average cost of ca...
ReferencesCravath, Swaine & Moore LLP (2012). Home: Information. Retrieved March 2, 2012, from        http://www.cravath.c...
The Securities and Exchange Commission (2010). Filings & Forms. Retrieved March 14, 2012, from       http://www.sec.gov/ab...
ExhibitsExhibit 1: Monster Global LocationsExhibit 2: LBO Rollout Plan LBO Schedule and Deadlines           Description   ...
Integration Planning Phase:         Evaluate business model synergy and                       2 - 3 months                ...
Exhibit 4: Financial HighlightsFinancial Highlights Fiscal Year Fiscal Year Ends:                      Dec 31 Most Recent ...
Balance SheetTotal Cash (mrq):                  250.32MTotal Cash Per Share (mrq):        2.13Total Debt (mrq):           ...
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Monster Term Paper Final Draft (Recovered)

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Management LBO Project – Student’s Eponym Used for Sponsorship Firm/Private Equity Firm for LBO of Monster Worldwide, Inc.

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Monster Term Paper Final Draft (Recovered)

  1. 1. Leveraged Buyout Acquisition Plan Proposal Submitted to Mr. Patterson “Pat” Waldenheimat, Chairman and CEOThe major objective in this Public-to-Private (Delist) LBO ofproposal is to implement a strategic restructuring initiative and Msverde Capitalbusiness plan strategy through an institutional leveraged buyout Assets LLCfor the world’s largest online employment services companythrough divestitures, core streaming, and the optimization ofproduct and service quality enhancements for long-runimprovements in the stabilization of increased positive cash flowmanagement, in sustained high levels of profitability, and themaximization of shareholder value.
  2. 2. Table of ContentsLEVERAGED BUYOUT PROPOSAL TRIGGER: ORGANIZATION PRESS RELEASE .......................................... 3A. EXECUTIVE SUMMARY AND FINANCIAL REQUEST: ........................................................................................ 3 1. EXECUTIVE SUMMARY: LEVERAGED BUYOUT (LBO) INITIATIVE ......................................................................... 3 Pre-LBO Strategic Objectives Recap: ..................................................................................................................................... 5 Objective I: Mission Statement: ............................................................................................................................................ 5 Objective II: LBO Target Search and Screening Process and Criteria: ................................................................................ 6 LBO Rollout Plan: Scheduling and Deadlines: .............................................................................................................. 6 LBO Primary Law Firm:......................................................................................................................................................... 6 LBO Primary Financial Advising Firm:.................................................................................................................................. 6 1.1 The Company ................................................................................................................................................. 6 1.2 Operations ...................................................................................................................................................... 7 1.3 Risk and Opportunities: .................................................................................................................................. 7 2. FINANCING REQUEST:............................................................................................................................................. 7 2.1 Structure of the Deal ...................................................................................................................................... 7 Negotiation Strategy (determining synergy): ........................................................................................................................... 8 Form of Acquisition: ................................................................................................................................................................ 9 Form of Payment: Capital Structure – Multiple Tranches ..................................................................................................... 9 Tax Considerations: ................................................................................................................................................................. 9 Accounting Considerations and Requirements: ...................................................................................................................... 9 Acquisition Vehicle: ............................................................................................................................................................... 10 Post-Closing Organization: .................................................................................................................................................... 10 Legal Form of Selling Entity: ................................................................................................................................................ 10 2.2 Sources and Uses of Funds at Closing: ........................................................................................................ 10B. THE COMPANY: .................................................................................................................................................... 10 1. INDUSTRY: ............................................................................................................................................................ 10 1.1 Markets ........................................................................................................................................................ 11 1.2 Market Trends .............................................................................................................................................. 12 1.3 Competition: ................................................................................................................................................. 15 2. PRODUCTS: ........................................................................................................................................................... 15 3.1 Product Mix: ................................................................................................................................................ 15 3. MANAGEMENT: ..................................................................................................................................................... 15 5.1 Monster Worldwide Organizational Chart: ................................................................................................... 15 5.2 Executives Resumes: .................................................................................................................................... 16 4. DESCRIPTION OF ASSETS: ..................................................................................................................................... 17 7.1 Account Receivables: .................................................................................................................................... 17 7.2 Inventories: .................................................................................................................................................. 17 7.3 Machine and Equipment: ............................................................................................................................. 17 7.4 Land and Buildings: ..................................................................................................................................... 17 5. LIABILITIES: ......................................................................................................................................................... 17 6. PRESENT MARKET VALUE OF THE COMPANY:...................................................................................................... 17 9.1 Capitalization of Monster Worldwide, Inc.: .................................................................................................. 18 9.2 Total Consideration: ..................................................................................................................................... 18 9.3 Total Purchase Price/Enterprise Value: ....................................................................................................... 18 1
  3. 3. Net Purchase Price: .................................................................................................................................................. 18C. FINANCIAL REVIEW: .......................................................................................................................................... 18 1. HISTORICAL FINANCIAL STATEMENTS: SEE EXHIBIT 4 FOR FINANCIAL HIGHLIGHTS.......................................... 18 3 – 5 Years, Audited or Reviewed: ............................................................................................................................. 18 2. FORECASTED FINANCIAL PERFORMANCE:............................................................................................................ 18 1.1 Assumptions: ................................................................................................................................................ 19REFERENCES ................................................................................................................................................................. 20EXHIBITS ........................................................................................................................................................................ 22 2
  4. 4. Leveraged Buyout Proposal Trigger: Organization Press Release After experiencing a 59% decline ($16.84 to $6.94) in the value of its stock price one year ago on March1, 2011, Monster’s CEO Salvatore Ianuzzi, speaking at the R.W. Baird & Co. conference, inform the audiencethat the company would consider seeking “strategic alternatives [Streetinsider.com, 2012] for the organization,according to an article published on March 1, 2012 by Streetinsider.com. Initial interpretation of this brief pressrelease prompted phase I LBO activity and led our team to make the following assessment: Indeed, on the surface the depression in share value has been largely impacted by a recessive globalfinancial contagion precipitated by fiscal and monetary instability - mainly in European markets led by problemsin Greece and Spain – which consequently elevated investors’ concerns and thus reducing overall confidence intrading and affecting capital inflows corporate equity. Yet, after preliminary analysis executed by our team ofanalysts on Monster Worldwide –our tier-1 LBO target) during the week immediately following March 1, 2012,we determined that the direct contributing factor to the reduction in investors’ confidence is rooted in poorperformance of working capital and unfavorable capital expenditures (e.g., marketing expenditures accounted for21% of revenue in 2011) decision. Our analysis conclusion can strongly be substantiated by the intraday priceappreciation that reached as high as 25% following the company’s CEO comments, as some industry analystsstipulate causal effect for this spike to a possible LBO alternative. Based on the aforementioned comments, webelieve in full concurrence with this viewpoint that Monster Worldwide, Inc. should be a top-tier candidate forour company’s next LBO diversification project, which is outlined in detail within this report.A. Executive Summary and Financial Request: 1. Executive Summary: Leveraged Buyout (LBO) Initiative With revenue contributions from its global operations of 42% in 55 countries [see Exhibit 1] around theworld (with 46.2% coming from North America alone) for the fiscal year of 2010, driven by on average 93million passive and active employment seekers globally per month, Monster Worldwide, Inc. has become thelargest online job search website in the world. In addition, online advertising revenue in the U.S. is expected togrow from 2012 to 2014 at a compound annual growth rate (CAGR) of 8%, in which during the same time the 3
  5. 5. CAGR for the global recruitment market is expected to reach 6%. These figures are promising and representgrowth opportunities for Monster Worldwide in the near future. Yet, although the company experienced a “1%”increase in revenue in FY 2010, they struggled severely in managing positive operating net profits, which areeasily illustrated in the fluctuating P&L swings over the past 5 business cycles. From this point of view, in lieu ofa pronounced weakness in management performance, there is a great opportunity to exploit this poor dispositionthrough LBO restructuring into potentially immediate returns between 45%-48% at the appropriate time ofdivestiture. As part of a strategic diversification expansion initiative to further build and fortify our existing portfolioof restructuring projects in various niche markets internationally, our teams of corporate managers and executivesconducted preliminary discussions in early June of 2011, prior to our annual shareholders’ meeting, to design anddraft a three-phase target acquisition screening process outline – Pre-screening Netting, Catch, and Release (ofnon-qualifying targets/subjects) that adheres to the following general set of criterion: 1) Acquisition target shouldbe a multinational corporation with a flat divisional organizational structure, or possibly a hybrid form comprisedof both a functional and divisional design; 2) Firm size should be moderate in the range of 5000 – 8000employees; 3) Focus industry is exclusively e-Commerce, online employment services; 4) Significantgeographical global presence in major markets in North and South America, Eurasia and Asia, South Pacific,Middle East, Europe, and with entrance phase development planning for Northern Africa and South Africa, withlogistical regional headquarters in North America, Europe, and Asia; 5) An existing mature growth cycle stage ofat least 3 years; 7) Target should be indexed for no fewer than five years on at least one major exchange; andfinally 8) Must be record accounts and evidence (e.g., newswires, media press releases, etc.) by company’sdecision makers, demonstrating public-to-private primer indicators for pre-LBO activity. In conclusion, on March 10, 2012, pre-solicitation governance and compliance review was conducted andfully completed by our legal team, upon which primary, secondary, tertiary candidates were selected. Following athorough examination of the three candidates, the collaborative work executed by our business and financedepartments determined by the second phase of our comprehensive pre-screening evaluation process to formulate 4
  6. 6. our findings for Monster Worldwide, Inc., our elected tier-one LBO candidate in this preliminary proposal report,and present the results to Mr. Waldenheimat, Chief Executive Officer, Mr. Simeon Prudence, Chief FinancialOfficer, fellow executives, and senior management. All ancillary and supporting financial data, figures, andbackground information on the targeted entity and its industry within the report is provided to substantiate thereport exploratory findings and our final assessment and conclusion to each of the members involved in their finaldecision-making process. Also note that all questions, inquiries, and comments or remarks are to be directed toM. Scott “Scooter” Green, Director of Business Development, at the following e-mail addressmsgreen@msverdecapital.com or by mobile phone at 415-389-XXXX.Pre-LBO Strategic Objectives Recap:Objective I: Mission Statement:The general purpose for this investment activity is to strengthen existing multinational portfolio accounts throughasset acquisition diversification that will enlarge company market viability and presence in niche industries withinthe global marketplace. Therefore, to achieve this goal, we thus propose in this acquisition plan to aggressivelypursue a management leverage buyout of Monster Worldwide, Inc., the world’s #1 online employment solutionservice company. Our short-term goal is to restructure the organization’s current operational tactic andmethodology with company’s existing leadership team, raise the level of operational performance that will yieldincreases in revenue, operating income, and positive cash flows within a 3 to 5-year period. Once overalloperating and financial health has been improved and is favorable after 5 years, in accordance to mutually agreedstandards and measures set by all relevant parties involved, it is our recommendation that asset divestitureplanning during the exit strategy phase of the project, either by way of cash sale to an interested and prospectivebuyer, leverage for the purchase of another firm, or through IPO reenlistment, should be underway. All proceedsfrom a sale will be used for further capital investment projects in mature markets under a similar scenario. If it isdetermined that an IPO relisting is deemed acceptable, then a retained percentage of ownership through preferredstock conversion to common shares of no less than 11.5% will be required. 5
  7. 7. Objective II: LBO Target Search and Screening Process and Criteria: Financial Returns: The target firm should have: Growth: The target firm should:  Have annual revenue, earnings, and operating cash-  A minimum return on assets of x% flow growth of at least x%, y%, an z%  A debt/total capital ratio  y%  Provide new products and markets of x% by 20??  Possess excess annual production capacity of x million  Unencumbered assets of $z million units Size: Diversification:  The target firm’s earnings should be largely  The target firm should be at least $x million in revenue uncorrelated with the acquirer’s earnings. Flexibility: Technology:  The target firm should possess important patents,  Target should use flexible manufacturing techniques. copyrights, and other forms of intellectual property. Quality: Warranty Record:  The target firm’s product defects must be x per  The target firm’s customer claims per million units million units manufactured. sold should be not greater than x. Labor Costs: R & D Capabilities:  The target firm should have introduced at least x new  The target firm should be nonunion and not subject to products in the last 18 months. significant government regulation. Source:LBO Rollout Plan: Scheduling and Deadlines:MonsterGanttChartScheduleAndDeadlines.xlsx Click icon to access.Asset Allocation/Capability Evaluation:LBO Primary Law Firm:We recommend Cravath, Swaine & Moore LLP as the lead counsel for the project.LBO Primary Financial Advising Firm:We recommend Credit Suisse Group AG as our leading auditing and financial advising firm for the project.1.1 The Company 6
  8. 8. Monster Worldwide, Inc. 622 Third Avenue Employees: 6,000 Financials in: USD (mil) 39th Floor, 622 Third Avenue Company Type: Public Parent Fiscal Year End: 31-Dec-2011 NEW YORK, NY 10017 Corporate Family: 46 Companies Reporting Currency: US Dollar United States Traded: New York Stock Annual Sales: 1,040.1 Exchange: MWW Net Income: 53.8 Tel: 212-351-7000 Incorporation Date: 1996 Total Assets: 2,058.0 Fax: 646-658-0540 Auditor: BDO USA, LLP Market Value: 860.4 Toll Free: 888-225-5867 (17-Feb-2012) www.about-monster.com1.2 Operations Monster Worldwide, Inc. (Monster Worldwide) is the parent company of Monster®, a global onlineemployment service provider. The company has three segments: Careers (North America), Careers (International)and Internet Advertising & Fees. The company’s Careers segments provide online services to customers invarious industries throughout North America, Europe, South America and the Asia-Pacific region, includingsearchable job postings, resume database access, recruitment media solutions throughout its network and othercareer-related content. Its Internet Advertising & Fees segment delivers online services primarily in NorthAmerica, including services such as display advertising and lead generation [OneSource, 2012].1.3 Risk and Opportunities: Macroeconomic drivers such as high unemployment, political despotism and civil disorder, naturaldisasters which disrupt supply chains, etc., serve as the largest threats to company stability and profitability.Other threats which may become detrimental to the company include both direct and indirect competition. However, in spite of certain uncontrollable risk factors, the company is always positioned to capitalize onopportunities that are embedded as natural components of economies of scales in the labor force: In perpetuity,there will always be a demand for human capital resources. 2. Financing Request:2.1 Structure of the Deal 7
  9. 9. Negotiation Strategy (determining synergy): Negotiating strategic planning was already in force prior to the LBO candidate selection process throughthe course institutional investment strategy. Currently, our company has a 9% controlling equity stake in thecompany and has held this position for two full fiscal years. Our position has been embellished and leveraged byour recent acquisition of one placement on Monster’s Board of Directors (aka, The Board). The significance ofthis position has allowed us an opportunity to build cohesive relationships with board members, managingexecutives, and organizational management that now has culminated in the preferred method of our buyoutacquisition as a “friendly takeover.” As stated before, the primary goal for this acquisition is to implement a management turnaroundrestructuring plan that includes capital divestitures, logistical consolidation of property, plants, and equipment,operations efficiency improvements through enhanced automated planning machinations and processes (e.g., SixSigma, Enterprise Resource and Management Planning, et al), and management and general operations retraining,cost structure reformation. We anticipate comprehensive restructuring efforts to interface slowly during the first18 months of the integration planning and implementation phase and accelerate exponentially immediatelyfollowing this planning phase. Synergies created during this phase and all subsequent phases leading up to theexit phase will mostly be intrinsic; creating value within the organization from top to bottom. Therefore, unlike higher premium percentage multiples 6x the combined stand-alone values of twocompanies used in valuing traditional, non-LBO acquisitions, because of the unique characteristic of this projectwe will require a lower synergy percentage multiple no more than 3x the combined stand-alone values forMonster Worldwide and Msverde Capital. The bulk of the enterprise value created (after adding synergy) overthe term of the LBO agreement will be generated by management performance-based measures. Once net presentvalue (NPV) of both future operating and free cash flows have been projected and determined, we can setperformance benchmarks and milestones to be accomplished by management consultant transition team andmanagement at Monster Worldwide. 8
  10. 10. The following deal structure outline provides additional detailed information pertaining to the LBOproposal process, as of this day, April 18, 2012:Form of Acquisition:  Friendly TakerForm of Payment: Capital Structure – Multiple Tranches The capital structure proposed to execute the LBO transaction of Monster Worldwide uses a consortiumof multiple tranches which are conducive to realize expected returns generated by aggressively moderate to highcapital structure. Furthermore, to take advantage of favorable interest rates incurred during the reorganizationperiod (5-7 years) leading up to the exit phase, it is recommended that this project is financed exclusively from amultiple tranche-based structure instead of a fund-based model. The components that comprise the multipletranche-based capital structure are the following:  Revolving Credit Facility (Revolver): Line of Credit (LOC) facility  Bank Note: Term Loan A credit facility  Issuance of Convertible Preferred Stock at 25% premium above Monster’s common sharesTax Considerations:  Tax ShieldsAccounting Considerations and Requirements:  Schedule 13 D must be filled with the SEC within 10 days of acquiring 5% of stock in another firm.  Schedule 14 D-1 must be filed with the SEC for tender offers  Tender offers must stay open a minimum of 20 business days  Filing necessary with FTC when buyer purchases assets or securities >$63.4 million or buyer or seller has annual sales or assets ≥ $126.9 million and other party has sales or assets ≥ $12.7 million. These thresholds increased annually by change in GDP implicit price deflator  30 day waiting period before transaction can be completed 9
  11. 11.  Hedge and Private Equity Fund Registration: Must register with SEC as investment advisors if assets ≥ $100; those with < $100 million subject to state regulation.Acquisition Vehicle:Limited Liability Company (LLC)Post-Closing Organization:Private Corporation registered under current name, “Monster Worldwide, Inc.”Legal Form of Selling Entity:MonsterLBOAgreeme nt2012.docx Click icon to access.2.2 Sources and Uses of Funds at Closing: Estimation of the Financial Sponsor’s Initial Equity Contribution All funding derived from multiple tranches will be used to purchase each share of common stock at anpredetermined exercise price during the negotiation phase, including a 25% premium at closing. At the timeMsverde Capital Assets elects to sale the company for secondary initial public offering (SIPO) at the exit phase ofits tenure as managing consultant, Msverde will retain no less than a 59% equity stake in common shares of thenewly reconstituted publicly-traded company, unless an unsatisfactorily, unaccepted level of pre-mutually-agreedbenchmarks and milestones have been incurred. If performance standards have been unmet and modifications toimprove those standards are not completed within a timeframe allotted by both parties, or if any materials adversechanges have been incurred by the management team in charge of daily operations for Monster Worldwide, Inc.,then upon relisting, management of Monster has first right to reduce the equity requirement from 59% to a levelnot to exceed no lower than 35%.B. The Company:1. Industry: Monster Worldwide is an online employment service company and its industry source code is registeredunder the classification titled Employment and Recruiting Agency. Today, the employment and recruitment 10
  12. 12. agency industry remains stagnant with regard to its growth rate and revenue, due to the lingering effects caused bythe 2008 global financial crisis. In one year from 2008 to 2009, revenue declined sharply by 21% - makingrevenue volatility extremely high - and from 2006 to the end of 2011 the industry has shown a -2.4% annualizedgrowth rate. Currently, markets have shown signs of acceleration in productivity and profitability, and, as a result,unemployment is expected to wane precipitously over the next 3-5 years. As increases in Internet usage soarsduring this same period in conjunction with increases in online job placement advertisements from employerswhile global economies (specifically, emerging and developing ones) continue to improve, this facility willbecome a key revenue driver for the industry. (Please Exhibit 3 for company vs. industry performance figures.)1.1 Markets The type of service offered by Monster Worldwide makes it abnormally susceptible to non-diversifiable,systemic market conditions. Therefore, to support this claim, a formal regression statistical analysis wasperformed using the company’s total revenue per market region as the dependent variable in the analysis andpercentage-based averages (+/-) of a select group of viable macro-economic independent variables, such asunemployment rates, Consumer Price Index (CPI), Real Gross Domestic Product (GDP) per Employee, and YearOver Year (YOY) Patents Total, Patents Inventions, and Patent Designs, which correspond regionally withMonster worldwide presence. The null hypothesis for the analysis states as follows: Monster Worldwide revenueis affected by [selected] global economic factors. Since the p-value for each of the independent variables were greater than the level of significance, Alpha(α), which was established at 5% (see chart below), the null hypothesis would be accepted. 11
  13. 13. Business Revenue Segmentation Regression Analysis: Null Hypothesis: Monster Worldw ide revenue is af f ected by [selected] global economic f actors Regression Statistics Multiple R 0.80 R Square 0.64 Adjusted R Square 0.10 Standard Error 102385.87 Observations 11 ANOVA df SS MS F Significance F Regression 6 75188006372 12531334395 1.20 0.45 Residual 4 41931462351 10482865588 Total 10 1.17119E+11 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 187945.772 77026.25135 2.44002231 0.07 -25913.39 401804.93 -25913.39 401804.93 Unemployment Rate % Yearly Weighted Average Increase/Decrease2.070606638 2610827.75 1260899.922 (YOY) 0.11 -889991.67 6111647.17 -889991.67 6111647.17 CPI Delta % Average -1632.6281 28574.67459 -0.057135491 0.96 -80968.64 77703.39 -80968.64 77703.39 Real GDP per Employee Person Average Increase/Decrease % (YOY) -3509900.7 10764750.06 -0.32605501 0.76 -33397638.31 26377836.92 -33397638.31 26377836.92 Patents Total (YOY) 3538123.76 22226157.7 0.159187378 0.88 -58171582.99 65247830.51 -58171582.99 65247830.51 Patents Inventions (YOY) -1135330 22299430 -0.050912959 0.96 -63048473.24 60777813.32 -63048473.24 60777813.32 Patents Designs (YOY) -469805.11 1340318.171 -0.350517602 0.74 -4191124.94 3251514.72 -4191124.94 3251514.721.2 Market Trends As stated previously, Monster Worldwide success is predicated on favorable macro-economic conditionsin which Producer Price index and inflation rates are sustained at modest to very insignificant levels. Dependingon direction of their movements, the correlation between these and other economic indicators and Monster’srevenue streams are closely contracted and usually move paralleled to one another. Conversely, all things equaland wage increases correlates closely with the CPI, a larger workforce usually results in higher demands forgoods and services, which could conceivably drive up prices. This is one key trend in the marketplace that can beeasily gauged and provide our financial analysts sufficient data and information for long-range forecasting,planning, and analysis (FP&A) that will mitigate and control costs, sustain or improve both operating and freecash flows, and maintain return on investment (ROI) target goals up to exit phase. Since GDP is a strong indicator of operational efficiency and a stable and effectual workforce, globalGDP growth rate (see chart below) for advanced and emerging and developing economies are expected tocontinue on a level of equilibrium, - that began in Q4 of 2009 and will end in the same quarter of 2014 -averaging between 3 and 5 percent (with exception to a short upward spike of nearly 5% for emerging countries ayear later). 12
  14. 14. GDP Growth - Quarter over Quarter (2007-2014) 15 10 5 0 -5 -10 World Advanced economies Emerging and developing economies The series of charts below illustrate the ebb and flow of economic or economic-related activity in theworld over a 10-year period (except where otherwise indicated by “*”). Each chart represents cumulativepercentage average increases/decreases according to factors referenced that are the progenitors to globalizedmarket trends for many world economies, including those in which Monster Worldwide has a clear and viablepresence. Civilian Labor Force (2000-2010) United States Canada France Germany Italy Netherlands Sweden United Kingdom 1.43% 0.88% 0.71% 0.74% 0.70% 0.63% 0.52% 0.43% Civilian Labor Force % Average Increase (YOY) 13
  15. 15. Global Unemployment Rate (Select): 2000-2010 United Kingdom, 3.87% Sweden, 4.24% Netherlands, 5.16% Italy, -1.17% Unemployment Rate % Yearly Cumulative Average Increase/Decrease (YOY) Germany, -0.32% France, 1.15% Canada, 2.04% United States, 9.87% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Global Patents and Inventions: 2000-2010Patents/Inventions % Average Increase/Decrease (YOY) 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% Korea, United Netherla Switzerla Germany Canada France Italy Sweden Finland Belgium Austria Denmark South Kingdom nds nd Total 2.78% 13.02% 3.84% 2.47% 2.72% 1.80% 3.96% 3.31% -0.01% 7.02% 2.46% 6.08% 4.76% Inventions 2.52% 12.73% 3.98% 2.16% 2.43% 1.23% 3.40% 2.82% 0.21% 6.90% 2.69% 4.87% 4.94% Designs 8.75% 23.43% 5.50% 7.74% 8.96% 7.42% 9.49% 9.41% 5.08% 18.71% 4.79% 28.84% 15.39% Worldwide Internet Usage: 2000-2009 Internet Usage Cumulative % Average Increase 33.66% 32.79% 33.56% 29.18% 29.08% 27.06% 26.14% 22.71% 19.48% 20.11% 18.24% 18.82% 14.76% 15.49% 11.00% 13.46% 10.61% 10.09% 10.44% 8.48% 7.89% 7.61% 7.64% 6.45% 6.75% 6.29% 5.47% 4.74% 14
  16. 16. 1.3 Competition: A formal SWOT analysis executed by our LBO financial team has concluded that market competition for2012 and forward in the industry is high and intense and will maintain this status as economic market conditionsimprove and investors’ confidence grows. Both emerging and developing economies will become the initialbeneficiaries of upward economic activity as many multinational companies will seek to control payroll and otheroperating costs through these markets. Therefore, new revenue stream opportunities will materialize as jobseekers who have become more competent as an Internet user will utilize this medium as a competitive advantageto expedite their job search process. Competition within the industry to capitalize on this opportunity will comefrom the following competitors: CareerBuilders.com  Dice.com  USAJobs.com LinkedIn.com  The Ladders.com  SnagaJob.com Indeed.com  Simply Hired.com  Job.com2. Products:3.1 Product Mix: Product mix comprise of Internet-based tools and applications for jobseekers and employers andadvertising platforms for employers.3. Management: The company’s structure is composed of a traditional flat organizational structure in the distinct levels:Executive management, operations management, and exempt and nonexempt employees. As a publicly-tradedentity, the company also has a Board of Directors headed by the Chairman of the Board and 7 other directors.The CEO serves as the Chairman, CEO, and President of the company.5.1 Monster Worldwide Organizational Chart: 15
  17. 17. Salvatore Iannuzzi Chairman of the Board, President, Chief Executive Officer James M. Langrock Executive Vice President, Chief Financial Officer Mark Stoever Lise Poulos Mark Conway Executive Vice President - Executive Vice President, Corporate Development and Chief Administrative Chief Information Officer Internet Advertising Officer5.2 Executives Resumes: Key Executives Biographies Salvatore Iannuzzi Salvatore Iannuzzi, serves as Chairman, President, Chief Executive Officer and a Director of Monster Worldwide, Inc. Mr. Iannuzzi has served as a Director of Monster Worldwide since July 2006, and Chairman, President and Chief Executive Officer of Monster Worldwide since April 11, 2007. Prior thereto, he was President of Motorola, Inc.s Enterprise Mobility business commencing in January 2007 to April 2007. Mr. Iannuzzi served as President and Chief Executive Officer of Symbol Technologies, Inc. from January 2006 to January 2007, when Symbol Technologies was sold to Motorola. He previously served as Symbol Technologies Interim President and Chief Executive Officer and Chief Financial Officer from August 2005 to January 2006 and as Senior Vice President, Chief Administrative and Control Officer from April 2005 to August 2005. He also served as a Director of Symbol Technologies from December 2003 to January 2007, serving as the Non-Executive Chairman of the Board from December 2003 to April 2005. From August 2004 to April 2005, Mr. Iannuzzi was a Partner in Sanguenay Capital, a boutique investment firm. Prior thereto, from April 2000 to August 2004, Mr. Iannuzzi served as Chief Administrative Officer of CIBC World Markets. From 1982 to 2000, he held several senior positions at Bankers Trust Company/Deutsche Bank, including Senior Control Officer and Head of Corporate Compliance. James M. Langrock James M. Langrock, was appointed to the position of Executive Vice President and Chief Financial Officer of Monster Worldwide Inc., effective January 27, 2011. Mr. Langrock had been Senior Vice President, Finance and Chief Accounting Officer of Monster Worldwide Inc., since May 15, 2008. Prior to joining Monster Worldwide, Mr. Langrock was Vice President, Finance of Motorola, Inc.s Enterprise Mobility Business from January 2007 to April 2008. From May 2005 to January 2007, Mr. Langrock served as the Vice President, Chief Accounting Officer and Corporate Controller at Symbol. From December 2003 to May 2005, Mr. Langrock was Symbols Vice President - Internal Audit. Before joining Symbol, he served as Chief Financial Officer at Empress International, Ltd., an importer and wholesale distributor, from May 2002 to November 2003. From 1991 to April 2002, Mr. Langrock held a variety of audit positions at Arthur Andersen LLP, including Senior Manager in the Audit and Business Advisory Practice. 16
  18. 18. Lise Poulos Lise Poulos, has been Executive Vice President and Chief Administrative Officer of Monster Worldwide Inc. since January 2008. Previously, she had served as Executive Vice President of Monster Worldwide since September 2007. Prior to joining Monster Worldwide, Ms. Poulos served as Senior Vice President, Human Resources of Motorola, Inc.s Enterprise Mobility business from January 2007 to July 2007. From 1997 to January 2007, Ms. Poulos held various roles at Symbol, including Senior Vice President, Human Resources and Corporate Communications from August 2006 to January 2007, Vice President, Human Resources from November 2005 to August 2006 and Director, Human Resources from 2002 to November 2005. Prior to joining Symbol, Ms. Poulos worked at a major energy company and in the financial services industry. Mark Conway Mark Conway, the current Senior Vice President, Technologies of Monster Worldwide, Inc., also assumed the role of Chief Information Officer of the Company on August 26, 2011.4. Description of Assets: Company assets consist of cash and cash equivalents, tangibles (PPE), intangibles such as patents, copyrights, and inventions.7.1 Account Receivables: Five-year average for AR is $370,914,000, from period 12/31/2007 to 12/31/2011, which accounts for 18.81% of total assets.7.2 Inventories:  None7.3 Machine and Equipment:  Computer and electronic equipment7.4 Land and Buildings:  Corporate and Regional offices for parent and all subsidiaries.5. Liabilities:  No long-term debt  No Preferred Stock Outstanding  Litigation in Process, Pending, or Settled6. Present Market Value of the Company:Market capitalization currently totals $1,106,632. 17
  19. 19. 9.1 Capitalization of Monster Worldwide, Inc.: The authorized capital stock of Monster Worldwide, Inc. consists of 1,500,000,000 shares of Common Stock, no par value, of which 123,923,000 shares are currently issued and outstanding and 800,000 shares of Series A Preferred Stock, no par value, of which 0 shares are issued and outstanding.9.2 Total Consideration:  Cash and Convertible Preferred Stock for Common Stock9.3 Total Purchase Price/Enterprise Value: Net Purchase Price: 2012 Total Purchase Price (USD Thousands) Plus Termination Fee Amount Equity Value (including 25% premiun) = 1,383,290 Value of Operations (NPV of Projected FCF) = 234,000 Economic Value Added = 68,000 Total Purchase Price = 1,685,290 Total Purchase Price Adjusted = 1,700,000 Termination Fee @ 8.5% = 144,500C. Financial Review:1. Historical Financial Statements: See Exhibit 4 for Financial Highlights 3 – 5 Years, Audited or Reviewed: FinalMonsterMergent reportbuilder.xlsx Click on icon to access.2. Forecasted Financial Performance:2011 MVA = Stock price x # of shares - Total common equity = $8.93 x 124 - $1,164 = $1,107 - $1,1642011 MVA = -$57 18
  20. 20. 2011 EVA = NOPAT - Operating Capital Weighted average cost of capital x = $134.4 - $397 x 17% = $134.4 - $66.22011 EVA = $68.2 2011 ROIC = NOPAT ÷ Operating Capital $134.40 ÷ $397 2011 ROIC = 33.86% Monsters Value of Operations (Millions of Dollars) g= 3.0% WACC = 17.00% Year 2011 2012 2013 2014 2015 FCF $35.00 $35.00 $35.00 $35.00 FCF2014(1+g) $29.915 = ───────── $25.568 (WACC − g) PVs of nonconstant FCFs $21.853 $18.678 PV of horizon value $137.415 $257.500 $36.050 = ────── $257.500 = ───── = Vop(12/31/2014) Vop(12/31/2011) = $233.43 (1+WACC) 4 14.00% 1.1 Assumptions: The following are assumptions used to various valuation models to arrive to final purchase price and conclusions: One-Year Libor Rate Market Rate (Equity FSP = firm size Shares Outstanding (as of April (March 2012): Risk Premium): 5.5% premium = 2.3 (percentage 17, 2012) = 123,923,000 1.0103% points added to CAPM estimate) 10-Year Treasury Monster Risk Free Rate: WACC = Since there is no Market Value = $1,106,632,000 Note: 1.988% 2.97% debt or preferred stock, the WACC is the Return on Stock, 16.6681 Line of Credit Expected rate of Return Cost of Equity =16.6681 Effective Tax Rate = 20% (LOC): Prime Rate on Equity = 8.47% plus Libor Rate Prime Rate: 3.25% Monster Beta: Range Stock Price (as of April 17, Termination Fee = 8.5% of Deal 2.16-2.97; Average 2.57 2012) = $8.93 Value 19
  21. 21. ReferencesCravath, Swaine & Moore LLP (2012). Home: Information. Retrieved March 2, 2012, from http://www.cravath.com/Credit Suisse Group AG (1997-2012). Home: Information. Retrieved March 2, 2012, from https://www.credit- suisse.com/investment_banking/advisory_services/en/mergers_and_aquisitions.jspCulbert, K. (2011). Ibis World Industry Report. Retrieved February 14, 2012, from www.ibisworld.comDatamonitor (2012). Monster Worldwide, Inc.: SWOT Analysis. Retrieved February 14, 2012, from http://0- online.datmonitor.com.library.ggu.eduFederal Trade Commission (2012). FTC Premerger Notification Program. Retrieved March 24, 2012, from http://www.ftc.gov/bc/hsr/hsrform.shtmHermann, J. T. (2003). Pacific Coast Capital, Inc.: Writing a Business Plan for a Leveraged Buyout. Retrieved on April 02, 2012 from www.pacific-coast-capital.comInternational Monetary Fund.com (2012). Economic Outlook. Retrieved February 14, 2012, from www.imf.comMergent.com (N/A). Mergent Online Search. Retrieved February 14, 2012, from http://0- online.mergent.com.library.ggu.eduMonster Worldwide, Inc. (2012). About Us. Retrieved March 1, 2012, from www.about-monster.comMorningStar, Inc. (2012). Investment Research Center. Retrieved on April 12, 2012 from http://0- library.morningstar.com.library.ggu.edu/Observations (2011). Average Stock Market Returns. Retrieved April 2, 2012, from http://observationsandnotes.blogspot.com/2009/03/average-annual-stock-market-return.htmlOneSource Information Services, Inc. (2012). Company Summary Report: Monster Worldwide, Inc. Retrieved February 14, 2012, from http://0-online.onesource.com.library.ggu.eduStandard & Poor’s (2012). S&P Capital IQ: NetAdvantage. Retrieved April 12, 2012 from http://0- www.netadvantage.standardandpoors.com.library.ggu.edu/NASApp/NetAdvantage/cp/companyIndustryS urvey.do?task=showPDFIndustrySurveyByTicker 20
  22. 22. The Securities and Exchange Commission (2010). Filings & Forms. Retrieved March 14, 2012, from http://www.sec.gov/about/forms/secforms.htm#proxyU.S. Census Bureau (2011). Statistical Abstract. Retrieved March 24, 2012, from http://www.census.gov/compendia/statab/cats/international_statistics.htmlYahoo, Inc. (2012). Yahoo Finance. Retrieved February 14, 2012, from http://finance.yahoo.com/q/bc?t=1d&s=MWW&l=on&z=m&q=l&c=%5EYHOh825 21
  23. 23. ExhibitsExhibit 1: Monster Global LocationsExhibit 2: LBO Rollout Plan LBO Schedule and Deadlines Description Length of Time Search and Pre-Intent Evaluation Exploratory research to identify stressed TBD Phase: companies signifying intent to delist and privatize Screening Phase: Execute preliminary evaluation of probable Less than 1 month - candidates to determine primary target following selection pool determination First Contact: Informal and Formal Secure primary contact of target and initiate 3 weeks Solicitation Phase: Bear Hug inquiry and informal solicitation Takeover Approach On-Site Canvassing and Interview Schedule Interest to Pursue and site visitation Less than 2 months - Phase: meeting following successful solicitation Decision Tree Analysis: Go/No Go Assess solicitation phase results and 2 - 4 weeks Decision Phase: determine Go/No Go decision Negotiation Phase: Due Diligence Perform proper due diligence of operations 2 - 3 months and Bid Offer (Friendly Takeover processes and procedures and execute Offer): complete formal valuation analysis 22
  24. 24. Integration Planning Phase: Evaluate business model synergy and 2 - 3 months integration conformity and develop and construct deal structure matrix Closing: Official Deal Acceptance Draft LBO agreement for signing and press TBD and Announcement: release Post-Closing Integration Develop cross-functional management 12 -18 months Implementation Phase: ambassadors to begin sellers management restructuring process Post-Closing Performance Install benchmarks and performance metrics 5 - 7 Years Monitoring Phase: archetype and assign private equity delegates to monitor progress Exit Strategy: Design and develop a strategic exit plan to 5th Year - Initiate Secondary begin divestiture phase-out Initial Public Offering processExhibit 3:Statistic Industry Leader MWW MWW RankMarket Capitalization WPP.L 10.48B 1.10B 16 / 48P/E Ratio (ttm) RMV.L 3,311.48 21.81 5 / 48PEG Ratio (ttm, 5 yr expected) LAMR 28.94 3.03 7 / 48Revenue Growth (Qtrly YoY) DNAX.OB 183.00% -2.00% 14 / 48EPS Growth (Qtrly YoY) IPG 38.80% N/A N/ALong-Term Growth Rate (5 yr) FMCN 23.18% 12.00% 7 / 48Return on Equity (ttm) RMV.L 175.38% 4.69% 31 / 48Long-Term Debt/Equity (mrq) 16.221 N/ADividend Yield (annual) IPG 2.20% N/A N/A 23
  25. 25. Exhibit 4: Financial HighlightsFinancial Highlights Fiscal Year Fiscal Year Ends: Dec 31 Most Recent Quarter (mrq): Dec 31, 2011 Profitability Profit Margin (ttm): 5.17% Operating Margin (ttm): 6.18% Management Effectiveness Return on Assets (ttm): 1.99% Return on Equity (ttm): 4.69% Income Statement Revenue (ttm): 1.04B Revenue Per Share (ttm): 8.53 Qtrly Revenue Growth (yoy): -2.00% Gross Profit (ttm): 1.04B EBITDA (ttm)6: 138.89M Net Income Avl to Common (ttm): 53.80M Diluted EPS (ttm): 0.43 Qtrly Earnings Growth (yoy): 2,076.80% 24
  26. 26. Balance SheetTotal Cash (mrq): 250.32MTotal Cash Per Share (mrq): 2.13Total Debt (mrq): 188.84MTotal Debt/Equity (mrq): 16.22Current Ratio (mrq): 0.86Book Value Per Share (mrq): 9.90 25

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