1. “Creating and Protecting Value” by Andrew Rimmington & Hugo Plowman RECRUITMENT INTERNATIONAL - FINANCE DIRECTORS FORUM THURSDAY 2 MAY 2013 WWW.MISHCON.COM © MISHCON DE REYA 2013

2. WWW.MISHCON.COM Who are Mishcon de Reya? ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Established in 1937  88 partners and 271 lawyers  Core areas: Dispute Resolution Corporate Real Estate Mishcon Private Employment

3. WWW.MISHCON.COM Recruitment Services Group ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Mishcon de Reya has a dedicated Recruitment Services Group, made up of recruitment specialists from our employment, fraud litigation and corporate practices.  We have significant experience working for recruitment companies of all sizes, from start-ups to large global players.  Our recruitment expertise encompasses all aspects of law, including corporate and commercial advice; data theft; team moves and restrictive covenants; employment; trademark and IP; outsourcing; IT; and debt recovery

4. It’s Business…but It’s Personal WWW.MISHCON.COM Our Approach ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013 Andrew Rimmington Partner - Corporate

5. “…You must never try to make all the money that’s in a deal. …Let the other fellow make some money too, because if you have a reputation for always making all the money, you won’t have many deals…” Getty, J. Paul. WWW.MISHCON.COM Making Deals Work… ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013

6. WWW.MISHCON.COM Creating Value ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Theory of Consistency and Credibility You live up to what you write down… Letter of Intent / Heads of Terms 99% Perspiration…1% Inspiration Preparation is key Retaining key rainmakers When the ink is dry, the hard work starts The 100-day plan – integration and managing expectations

7. WWW.MISHCON.COM It’s Business…but It’s Personal… ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Minimum Time Commitment?  Apportionment of Responsibilities  The Business Plan  Dividend Policy (money out)  Incentivising Key Members of the Management Team

8. WWW.MISHCON.COM Ownership Structure ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Limited Company or LLP? Staff turnover and in particular the loss of staff relationships with clients and candidates is a key issue for all staffing businesses. Traditionally efforts have been made to retain staff through commission and other bonus schemes and sometimes through the use of option structures or other share schemes. The introduction of limited liability partnerships (LLPs) gives companies the chance to address some of these issues, in particular because of the different tax treatment of LLPs.

9. WWW.MISHCON.COM LLPs – Key Benefits ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Key Benefits: Members of LLPs treated as self-employed is that no employer's national insurance is payable on their remuneration. This creates a saving of 13.8% of their salary and bonus which can be used to increase their pay to more competitive levels, to increase overall "post-pay" profitability or a combination of the two. The impact of this significant saving on profits and the motivation of staff can be significant. Changes proposed by Government – recommend caution until position clarified

10. WWW.MISHCON.COM Shares for Rights Proposals ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Key Issues: Under the proposals a new owner-employee contract could be offered by employers to staff, giving them shares worth between £2,000 and £50,000. In return they would lose rights including unfair dismissal, redundancy, training rights and the right to flexible working. Any capital gains on the shares will be exempt from capital gains tax when sold. Companies will have to arrange for employees to be given free independent legal advice.

11. WWW.MISHCON.COM Shares for Rights Proposals ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Key Issues: Valuation of shares Compulsory transfer of shares – when an employee leaves Cost of implementing and managing a Shares for Rights Scheme

12. WWW.MISHCON.COM Protecting Value ANDREW.RIMMINGTON@MISHCON.COM © MISHCON DE REYA 2013  Compulsory Transfer of Shares on Exit  Pre-emption Rights on any Sale of Shares  Planned Exit (Tag Along/Drag Along)?  Earn Outs – Good News or Bad?  Restrictive Covenants and Data Theft

13. WWW.MISHCON.COM Protecting Value By Hugo Plowman HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  The database is the cornerstone of the recruitment business  The people are its lifeblood  It’s Business but it’s Personal

14. WWW.MISHCON.COM The Problem HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  Data Theft and Unfair Competition cannot be ignored afflicts most recruitment companies will hit your bottom line will lead to the loss of key staff, clients and candidates will damage your reputation and staff morale  The rise of LinkedIn

15. WWW.MISHCON.COM What is “Unfair Competition”? HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  It may take many guises: stealing data diverting vacancies selling data to competitors hacking poaching staff and team moves tapping up clients and candidates in breach of covenant “Linking In” to clients and candidates? spreading false market rumours about your solvency  It devalues the business and jeopardises revenue

16. WWW.MISHCON.COM The Solution HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013 INVESTIGATION ACTION COMPLETION PROTECTION

17. WWW.MISHCON.COM Stage 1: Protection HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  Employment contracts Confidentiality Enforceable restrictive covenants Right of search Email, internet and social networking policies  Operational steps IT security and technical measures Monitoring  Publish the steps you have taken to protect the business

18. WWW.MISHCON.COM Stage 2: Investigation HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013

19. WWW.MISHCON.COM Stage 3: Action HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  Objectives: recover your confidential data protect client’s and candidate’s data enforce covenants recover costs and damages (or an account of profits) send out message (internally and externally) protect the value of the business

20. WWW.MISHCON.COM Action Continued HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  Numerous options available  Choice depends on what comes out of the investigation stage  All involve pressure  Create the right atmosphere for settlement  Focus on ROI

21. WWW.MISHCON.COM Constantly improve the box of tricks HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013

22. WWW.MISHCON.COM Confuse – Destabilise – Negotiate HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013

23. WWW.MISHCON.COM Stage 4: Completion & Policing HUGO.PLOWMAN@MISHCON.COM © MISHCON DE REYA 2013  Sweep Up  Make Up  Lock Up  Speak Up  Build Up

24. WWW.MISHCON.COM Thank you © MISHCON DE REYA 2013 Hugo Plowman Partner E: hugo.plowman@mishcon.com T: +44 20 7440 7149 Andrew Rimmington Partner E: andrew.rimmington@mishcon.com T: +44 207 406 6063