8-K: CBIZ to Acquire Marcum, Creating Seventh-Largest Accounting Services Provider in the U.S.

CBIZ, Inc. has announced a definitive agreement to acquire the non-attest business of Marcum LLP, a move that will establish CBIZ as the seventh-largest accounting services provider in the U.S.

Summary

• CBIZ, Inc. has agreed to acquire the non-attest business of Marcum LLP for approximately $2.3 billion, with roughly half in cash and half in CBIZ stock.
• The combined entity will have an estimated annual revenue of $2.8 billion, making CBIZ the seventh-largest accounting services provider in the U.S.
• Marcum's attest business will be acquired by Mayer Hoffman McCann P.C., with whom CBIZ already has an Administrative Service Agreement.
• The transaction is expected to close in the fourth quarter of 2024, pending approvals from CBIZ stockholders and Marcum partners, as well as other customary closing conditions.
• The deal is expected to be accretive to CBIZ's adjusted earnings per share by approximately 10% in 2025.

Sentiment

Score: 9

Explanation: The document is highly positive, emphasizing the strategic benefits, growth opportunities, and financial accretion expected from the acquisition. The language is optimistic and forward-looking, indicating strong confidence in the deal's success.

Positives

• The acquisition will solidify CBIZ's position as a leading provider of professional services to the middle market.
• The deal is expected to accelerate CBIZ's growth and position it as a preferred acquirer.
• The combined entity will offer a broader range of services and deeper expertise to clients.
• The transaction is expected to enhance CBIZ's ability to attract and retain top talent.
• The acquisition will enable greater investment in technology and innovation.

Negatives

• The transaction is subject to various closing conditions, including approvals from CBIZ stockholders and Marcum partners.
• There is a risk of litigation related to the transaction.
• The anticipated benefits and synergies may not be achieved in a timely manner or at all.
• Integration costs could be higher and more time-consuming than expected.
• The transaction could disrupt ongoing plans and operations of both companies.

Risks

• The transaction may not close in a timely manner or at all due to various conditions.
• There is a risk of litigation related to the transaction.
• The anticipated benefits and synergies may not be achieved or may be delayed.
• Integration costs could be higher than expected.
• The transaction could disrupt ongoing operations and relationships with clients and employees.
• The financing may not be obtained as anticipated, and the increased leverage could have negative effects.

Future Outlook

The transaction is expected to be accretive to CBIZ's adjusted earnings per share by approximately 10% in 2025, with further accretion expected as synergies are realized and debt is reduced. The combined company aims to leverage its strengths to bring more diversified services and expertise to clients and attract new business.

Management Comments

• Jerry Grisko, President and CEO of CBIZ, stated that the acquisition is the most significant transaction in CBIZ's history and will create a company with combined annual revenue of approximately $2.8 billion.
• Jeffrey Weiner, Chairman & CEO of Marcum, noted that the two companies share a dedication to providing high-quality services and that the merger will bring more diversified services and greater expertise to clients.

Industry Context

This acquisition consolidates two major players in the accounting and advisory services industry, creating a larger entity that can compete more effectively with larger firms. It reflects a trend of consolidation in the professional services sector to achieve greater scale and efficiency.

Comparison to Industry Standards

• The acquisition will make CBIZ the seventh-largest accounting services provider in the U.S., placing it among the top firms in the industry.
• Marcum is currently the 13th-largest accounting firm in the U.S., with approximately $1.2 billion in revenue.
• The combined entity will have a revenue of approximately $2.8 billion, which is comparable to other large national accounting firms.
• The transaction is valued at approximately 12.0x Marcum's adjusted EBITDA or 10.1x including the present value of the tax step-up, which is within the range of typical valuations for similar transactions in the professional services sector.

Stakeholder Impact

• Shareholders are expected to benefit from the accretive nature of the transaction and the potential for long-term value creation.
• Employees of both companies will have expanded career opportunities and access to enhanced learning and development programs.
• Clients will benefit from a broader range of services and deeper expertise.
• The transaction is expected to strengthen CBIZ's position in the market, which could benefit suppliers and other business partners.

Next Steps

• CBIZ will file a proxy statement with the SEC.
• CBIZ will seek approval from its stockholders for the transaction.
• Marcum will seek approval from its partners for the transaction.
• The parties will work to satisfy all closing conditions.
• The transaction is expected to close in the fourth quarter of 2024.

Key Dates

Keywords

acquisition, merger, accounting services, financial services, professional services, CBIZ, Marcum, Mayer Hoffman McCann, attest, non-attest, synergies, integration