DEFM14A: CBIZ to Acquire Marcum LLP in $2.3 Billion Deal, Seeks Shareholder Approval for Stock Issuance

CBIZ, Inc. is set to acquire Marcum LLP for approximately $2.3 billion, requiring shareholder approval for the issuance of stock consideration at a special meeting on October 23, 2024.

Summary

• CBIZ, Inc. has entered into an agreement to acquire Marcum LLP for approximately $2.3 billion, including $1.1 billion in cash and 14.4 million shares of CBIZ common stock.
• The transaction is structured as a merger of a CBIZ subsidiary with Marcum Advisory Group LLC (MAG), with MAG continuing as a wholly-owned subsidiary of CBIZ.
• Prior to the merger, Marcum will contribute its non-attest business assets to MAG, while CBIZ CPAs P.C. will purchase Marcum's attest business assets in a separate transaction.
• Shareholder approval is required for the issuance of CBIZ stock, which will represent approximately 22% of the company's outstanding shares after the transaction.
• The special meeting to vote on the stock issuance proposal is scheduled for October 23, 2024.
• The deal is expected to close in the fourth quarter of 2024, subject to shareholder approval, regulatory approvals, and other customary closing conditions.
• The board of directors recommends that shareholders vote in favor of the stock issuance proposal and a proposal to adjourn the special meeting if necessary.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook on the acquisition, highlighting the strategic benefits and financial impact. However, it also acknowledges potential risks and challenges associated with the transaction, resulting in a moderately positive sentiment score.

Positives

• The board believes the transaction will enable CBIZ to achieve greater scale and solidify its position as a leading provider of professional advisory services.
• The transaction is expected to create significant financial benefits for CBIZ and its shareholders.
• The stock consideration aligns the long-term interests of Marcum's owners with CBIZ and its shareholders.
• The continuity in the board and executive officers, with the addition of a Marcum nominated director, is expected to be viewed favorably by clients, employees, and investors.

Negatives

• The issuance of stock will dilute the ownership of existing CBIZ shareholders.
• The company will incur substantial indebtedness to fund the transaction, increasing its debt to EBITDA ratio.
• There are risks associated with integrating Marcum's operations and retaining key personnel.
• The company may be subject to litigation challenging the transaction.

Risks

• The transaction may not be completed if the conditions to closing are not satisfied.
• The integration of Marcum may not be successful, and the anticipated benefits may not be realized.
• The company may underestimate the liabilities it is assuming in the transaction.
• The company's increased leverage following the transaction may adversely impact its business.
• The significant number of shares issuable as stock consideration may adversely impact the stock price.
• The company may be subject to litigation or threats of litigation challenging the transaction.
• Recent SEC and PCAOB sanctions against Marcum may adversely impact our performance and reputation.
• If we are unable to implement and maintain effective internal control over financial reporting following completion of the Transaction, we may fail to prevent or detect material misstatements in our financial statements, in which case investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Stock may decline.
• Cyber-attacks or other security breaches involving our or Marcums computer systems or the systems of one or more of our or Marcums vendors could materially and adversely affect our business.
• Rapid technological changes could significantly impact our competitive position, client relationships and operating results and our ability to realize the anticipated benefits of the Transaction.
• Our goodwill and other intangible assets could become impaired, which could lead to material non-cash charges against earnings and a material impact on our results of operations and financial condition.
• The Transaction could exacerbate the other existing business risk that we face.

Future Outlook

Subject to shareholder approval and the satisfaction of other conditions, the transaction is expected to close in the fourth quarter of 2024, with the combined company aiming to achieve significant financial benefits and scale.

Management Comments

• The Board of Directors believes that the Stock Issuance Proposal and the Adjournment Proposal to be presented at the Special Meeting are in the best interests of the Company and our shareholders and recommends that shareholders vote FOR each of the proposals.

Industry Context

The acquisition reflects a trend of consolidation in the professional services industry, with firms seeking to expand their geographic reach, service offerings, and expertise to better serve clients and compete in a dynamic market.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• A full comparison would require a detailed analysis of CBIZ's and Marcum's financial performance relative to their peers, considering metrics such as revenue growth, profitability, client retention, and employee satisfaction.
• Comparable companies in the professional services industry include Accenture, Deloitte, Ernst & Young, KPMG, and PwC.
• Benchmarking the combined entity against these industry leaders would provide insights into its competitive positioning and potential for future growth.

Legal Proceedings

• The Company has received demand letters on behalf of purported shareholders alleging certain disclosure deficiencies in this proxy statement.

Stakeholder Impact

• Shareholders: Potential dilution of ownership due to stock issuance, but also potential for increased value through synergies and growth.
• Employees: Integration of Marcum's employees into CBIZ, with potential changes in compensation and benefits.
• Customers: Access to a broader range of services and expertise from the combined company.
• Suppliers: Potential changes in supplier relationships as CBIZ integrates Marcum's operations.

Next Steps

• Obtain shareholder approval for the stock issuance proposal at the special meeting on October 23, 2024.
• Secure regulatory approvals, including the expiration or termination of the waiting period under the HSR Act.
• Complete the Attest Purchase transaction.
• Finalize the debt financing arrangements.
• Integrate Marcum's operations with CBIZ's existing business.

Key Dates

Keywords

merger, acquisition, stock issuance, shareholder approval, Marcum LLP, CBIZ, financial services, accounting, proxy statement, NYSE