A summary of the ASO (outsourced administrative services for human resources outsourcing) B2B middle market industry snapshot.

1.
HRO Administration Services ASO Market Snapshot
INDUSTRY VALUATION SUMMARY
Valuation multiples vary by industry and are calibrated based on the financial comparables. For the BPO‐HRO‐ASO
industry: small private administrative services outsourcing with a platform are valued at 1 to 4X recurring revenue
multiple with scaled enterprises realizing a 5 to 10X EBITDA multiple1
.
STAR PERFORMER COMPARABLES
 Double Digit Revenue Growth
 Acquisition less than 0.5X first year revenues
 55%+ Gross Profit
 Double Digit EBITDA
 Industry Category Leadership Position
 Multiple Channels for Routes to Market
 Useful Capital Partnership
 Multi Award Winner
1 Source: Crunchbase.com: HR Tech funded deals data

2.
ASO Market Summary / Administrative Services
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ASO MARKET SNAPSHOT2
:
Across North America there are more than 340 private companies greater than $1m in annual revenues
that provide HRO services.
HoldCo(s) ASO Direct with
Proprietary
Platforms
Software Platforms
for Resellers
ASO Service
Providers
HR Compliance
Benefits
Administration
WFM Payroll
Staffing
~106 Modem SaaS Payroll‐HRTech Platforms3
Funded ~800 resellers of Ultimate, Kronos, iSolved, Prism with $1m+,
plus ~200+ Agnostic
plus ~50 WFM Solutions with $1m+
plus 200+ Industry Solutions
ASO MARKET SUMMARY HISTORY:
Pre SaaS-Cloud era, the North America ASO market was dominated by UltiPro licensed resellers and large
publicly traded holding companies (ADP, Paychex, Ceridian) focused on the 50 to 500 EE market with
PEOs dominating the under 50 EE market.
2
For B2B North America.
3 Crunchbase

3.
Failed ASO PEO Hybrid Models

4.
2016 HRO Services Beyond HRTech Private Company Providers of Employment
Lifecycle Services to Middle Market via Functional or Bundled HRO4
– ASO5
‐ BPO
Companies:
Count Functional Solution Revenues <$5M >$9M
110 Workforce Administration 80+ 30
105 Benefits Administration 80+ 25
55 Compliance Administration 20 15
100 HCM Implementation and Managed Services 90 10
500 Payroll Service Bureaus 800 200
500 Brokers 6,000 2,000
Midmarket Platforms with Resellers
PEO Platforms6
with Resellers
Global Payroll Platforms with Resellers
Looking for an HR partner?
4 Small Business HROs and Global multi functional BPOs & HRO
5 ASOs provide and HRTech platform plus HR shared services.
6 PrismHR (formerly Davison, HR Pyramid acquired Summit PEO Software in 2016) > 64,000 organizations and 1.8 million WSEs

5.
HR DEPARTMENT OF ONE HRTECH PLATFORM MARKET SUMMARY ~ 2015
PUBLIC
SPONSORED
PRIVATE REGIONAL LEADERS

6.
 Build and take advantage of vendor management needs of the marketplace.
 Build and take advantage of private label recurring solutions (1. Survey, 2. Talent, 3 HR Access).
 Build a community of preferred vendors for each industry to recommend and comarket / cosell
as needed.
 Build a community of distribution partners.
 Solve the gap of industry pre‐configured capabilities.

7.
HR Technology & Services Bundle Pricing for the Small Business Market (50 to 500 EE)
Over the past few years, HR technology platforms have added the following components:
1) Core Employee Data Applications: Payroll & Tax, Time, Expense, WFM, Performance, Analytics, etc.
2) Human Capital Content & Tools: Assessments, Recognition, Compensation, Training, Wellness,
Learning, etc.
HR services vary by industry and company size, but most commonly include:
1) Administration: Payroll, Benefits, Onboarding
2) eRecruiting, Staffing, Recruiting
3) Compensation
4) Tier I HR Support
5) HR Consulting
HR preferred vendor services most commonly include:
1. eRecruiting: job placement and management including background and reference checking
2. Staffing
3. Salary & Compensation analysis
4. Training
5. Benchmarking & Intelligence
6. Wellness & Health
7. Compliance: Documents, Immigration Services, Reporting
8. Translation Services
Core HR
Payroll &
Tax
WFM
Benefits
Admin
HR
Support
EMPLOYMENT
LIFECYCLE
GROSS
PROFIT
Consulting & Vendor Services $58 Recruiting 30%
HR Support $99 Staffing 25%
Benefit Brokerage & Admin $275 Talent Management 70%
Talent Management $25 Payroll & WFM 65%
HRIS $48 Administrative Support 65%
Time & Labor $19 HR Support 70%
Reporting & Analytics $9 Outplacement 80%
Compliance Administration $9
Payroll & Tax $100
Total Per Employee Per Year $118 $92 $275 $157
TOTAL= 642$

8.
Industry Briefing / The ASO HRO Market
Industry Snapshot Industry Briefing Expansion Options
Industry news
Market landscape
Technology
Vendor Spend
Model Economics
Crossing the Chasm
Star vs. Industry Leader
Acquisitions
Alliances
Channel Partners
Resellers
Portfolio
Bundled Services
A lot depends on how you fit the pieces of your business
together, managing silos and enabling your people with the
right processes, tools, and partners.
Spend an hour with us instead of
a week evaluating dozens of
different solutions.
For a detailed review of your industry comps, please contact Charles Bedard
ERGO COMPS LLC / www.ERGOComps.com / ERGO@ERGOcomps.com / Direct: 214-702-6427
/ Comps based Advisory Services
CONTACT
ERGO
Do you have the right partners?
How do you compare to the compeition?
Is your busimess model a Wealth Strategy?
Does your organizational leaders have Strategic Clarity?
What is the forecast impact of potential expansion and
corporate development options?
Our Comps based advisory services will align the CEO vision to
strategic planning to operational execution reality.

9.
How do you Compare?
Crossing the chasm to sector leadership starts with knowing how you compare.
By Market Leaders, Innovators, Star Performers
Capabilities Portfolio
Industry platforms and players
Change management requirements
Early Warning Signs
The Portfolio Lifecycle Chasm
The Financing Chasm
The Scalability Chasm
What Do I Need to Know to Expand Profitably?
When considering expansion, this is what you need to know:
Strategic Alternatives
By Market Competitive Intelligence
Expansion Economics, Strategies, Options
M&A Corp Dev Opportunities
Financing, Recapitalization and Capital Options
Workforce Labor Supply Market Analysis
Infrastructure & Resource Requirements
Distribution versus Channel Partners
Communities: Buyers, Partners, Influencers
Vendor & Partner Opportunities
Do you have the right Partners to execute your strategy?
Sourcing Better Partners Checklist:
Review & Evaluation
Sourcing & Selection
Qualification & Recruiting
Productivity & Scalability
Commitment and MVP Programs
Management & Execution
ASO Market Summary / Contact ERGO for an Industry Briefing
Do you have the right partners?
@Copyright 2018 ERGO Comps LLC. All Rights Reserved.
Industry Briefing
Agenda