Private Client Group
Business Advisory Services
Sears Tower
233 South Wacker Drive
[GRAPHIC OMITTED] Suite 5620
Chicago, IL 60606
(312) 928-8800
FAX (312) 928-1987
FAX (312) 928-8844
July 6, 2000
Special Committee of the
Board of Directors (the "Special Committee")
Business Resource Group
2150 North First Street, Suite 101
San Jose, CA 95131
Members of the Special Committee:
Business Resource Group (the "Company") and BRG Acquisition Corporation (the
"Acquiror"), a subsidiary of BR Holdings LLC, which is a subsidiary of Three
Cities Research Corp. ("Three Cities"), propose to enter into a Plan and
Agreement of Merger (the "Merger Agreement") pursuant to which (i) the Acquiror
would commence a tender offer (the "Tender Offer") for all outstanding shares of
the Company's common stock, par value $0.01 per share (the "Common Shares"), for
$9.25 per share, net to the seller in cash (the "Consideration") and (ii) the
Company, or the Company's successor, would be merged into the Acquiror in a
merger (the "Merger"), in which any Common Share not acquired in the Tender
Offer, other than certain Common Shares held by management, held in treasury,
held by the Acquiror or held by any direct or indirect subsidiary of the Company
or as to which dissenter's rights have been perfected, would be converted into
the right to receive the Consideration. The Tender Offer and the Merger, taken
together, are referred to as the "Transaction."
You have asked us whether, in our opinion, the Consideration to be received by
the holders of the Common Shares, other than members of the management of the
Company who are participating in the Transaction with Three Cities (the
"Participating Holders"), pursuant to the Merger Agreement is fair from a
financial point of view to such holders, other than the Participating Holders.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial
information relating to the Company that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of the Company furnished to us by
the Company;
(3) Conducted discussions with members of the senior management
and representatives of the Company concerning the
matters described in clauses 1 and 2 above;
MERRILL LYNCH BUSINESS ADVISORY SERVICES
Business Resource Group
07/06/00
Page 2
(4) Reviewed the market prices and valuation multiples of
certain publicly traded companies that we deemed to be
relevant;
(5) Reviewed the results of operations of the Company and compared
them with those of certain publicly traded companies
that we deemed to be relevant;
(6) Compared the proposed financial terms of the Transaction with
the financial terms of certain other transactions that
we deemed to be relevant;
(7) Reviewed a draft dated July 5, 2000 of the Merger Agreement;
and
(8) Reviewed such other financial studies and analyses and took
into account such other matters as we deemed necessary,
including our assessment of general economic, market and
monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or been furnished with any such evaluation or
appraisal. In addition, we have not assumed any obligation to conduct any
physical inspection of the properties or facilities of the Company. With respect
to the financial forecast information furnished to or discussed with us by the
Company, we have assumed that such information has been reasonably prepared and
reflects the best currently available estimates and judgment of Company's
management as to the expected future financial performance of the Company. We
have also assumed that the final form of the Merger Agreement will be
substantially similar to the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions as
they exist and can be evaluated on, and on the information made available to us
as of, the date hereof.
In connection with the preparation of this opinion, we have not been authorized
by the Company or the Special Committee to solicit, nor have we solicted,
third-party indications of interest for the acquisition of all or any part of
the Company.
In addition, the Company has agreed to indemnify us for certain liabilities
arising out of our engagement. We have also in the past, and may continue in the
future, provide financial advisor services to Three Cities. In the ordinary
course of our business, we may actively trade the Common Shares and other
securities of the Company, for our own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities.
This opinion is for the sole use and benefit of the Special Committee. Our
opinion does not address the merits of the underlying decision by the Company to
engage in the Transaction and does not constitute a recommendation to any holder
of the Common Shares as to whether to tender such Common Shares in the Tender
Offer or as to how such holder should vote on the proposed Merger or any matter
related thereto.
We are not expressing any opinion herein as to the prices at which the Common
Shares will trade following the announcement of the Transaction.
MERRILL LYNCH BUSINESS ADVISORY SERVICES
Business Resource Group
07/06/00
Page 3
On the basis of, and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration to be received by the holders of the Common
Shares in the Transaction, other than the Participating Holders, is fair from a
financial point of view to the holders of Common Shares, other than the
Participating Holders.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
------------------------------------
Kit A. Kamholz
Vice President
Merrill Lynch Business Advisory Services