8-K: CBIZ Completes Acquisition of Marcum, Creating Largest Full-Service Professional Services Advisor

CBIZ, Inc. has finalized its acquisition of Marcum LLP's non-attest business, establishing itself as the largest full-service professional services advisor in the U.S.

Summary

• CBIZ, Inc. has completed the acquisition of Marcum LLP's non-attest business, with the transaction closing on November 1, 2024.
• The deal includes a cash payment of $637.6 million to Marcum partners, plus an additional $425.5 million to satisfy Marcum's obligations and other closing payments.
• CBIZ will also issue 14,260,645 shares of its common stock to Marcum partners, with some shares subject to continued service requirements and others delivered in installments.
• To finance the acquisition, CBIZ entered into a new credit agreement for $2.0 billion, consisting of a $1.4 billion term loan and a $600 million revolving credit facility.
• The combined entity is expected to have annualized revenue of approximately $2.8 billion.
• Marcum's attest business was acquired by CBIZ CPAs P.C., a related firm.

Sentiment

Score: 8

Explanation: The document conveys a highly positive sentiment due to the strategic acquisition, expected financial benefits, and the creation of a market-leading entity. The language used is optimistic and forward-looking, indicating strong confidence in the transaction's success.

Positives

• The acquisition positions CBIZ as the largest full-service professional services advisor in the U.S.
• The combined entity will offer an enhanced breadth of services and depth of expertise to clients.
• The transaction is expected to be accretive to CBIZ's earnings per share in 2025, with an estimated contribution of approximately 10%.
• The acquisition is expected to accelerate growth and further position CBIZ as an acquirer of choice.
• The combined company will have over 10,000 team members.

Risks

• The integration of Marcum's business may be more costly and time-consuming than anticipated.
• The transaction could disrupt ongoing plans and operations of both companies.
• The increased leverage of CBIZ following the transaction could pose financial risks.
• There is a risk that the anticipated benefits and synergies of the transaction may not be fully achieved.

Future Outlook

The transaction is expected to be accretive to CBIZ's earnings per share in 2025, with an estimated contribution of approximately 10%. The combined company aims to offer an unmatched breadth of services and depth of expertise, driving innovation and enhancing performance.

Management Comments

• Jerry Grisko, President and Chief Executive Officer of CBIZ, stated that the acquisition represents a major milestone and new chapter for CBIZ, its people, and shareholders.
• Grisko also noted that with over 10,000 team members, CBIZ will offer clients an enhanced breadth of services and depth of expertise.

Industry Context

This acquisition consolidates two major players in the professional services industry, creating a dominant force in the middle market. It reflects a trend towards consolidation and expansion of service offerings in the accounting, tax, and advisory sectors.

Comparison to Industry Standards

• The acquisition of Marcum by CBIZ creates a firm with a scale and service breadth that is unmatched in the U.S. middle market professional services sector.
• While other firms like RSM, BDO, and Grant Thornton also offer a range of services, the combined CBIZ-Marcum entity is expected to have a larger footprint and a more comprehensive suite of offerings.
• The transaction is similar to other large-scale mergers in the professional services industry, where firms seek to expand their market share and service capabilities through acquisitions.
• The financial metrics, such as the $2.8 billion in expected annualized revenue, place the combined entity among the top tier of professional services firms in the U.S.

Management Changes

Stakeholder Impact

• Shareholders: Expected to benefit from increased earnings per share and growth opportunities.
• Employees: Will have access to enhanced learning and development opportunities and expanded career paths.
• Clients: Will benefit from a broader range of services and deeper expertise.
• Suppliers: No significant impact is expected.
• Creditors: New credit facilities have been established to finance the acquisition.

Next Steps

• CBIZ will integrate Marcum's non-attest business into its operations.
• CBIZ expects a Marcum nominee to be appointed to its board in early 2025.
• The company will file pro forma financial information relating to the transaction within 71 calendar days.

Key Dates

Keywords

CBIZ, Marcum, acquisition, professional services, merger, accounting, tax, advisory, benefits, insurance, technology, credit facility, term loan, revolving credit