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06 AUG 2024 / MERGERS & ACQUISITIONS
Ever get the feeling that the accounting world is turning into the Wild West, with big-name firms snapping up rivals faster than you can say "tax season"? Well, saddle up because CBIZ just made a move that's sure to shake up the industry. In a jaw-dropping $2.3 billion deal, CBIZ is set to acquire Marcum LLP, creating the seventh-largest accounting firm in the U.S. with combined annual revenues of about $2.8 billion. But what does this blockbuster deal mean for the rest of us? Let’s break it down.
Picture this: It’s a brisk morning, and you’re sipping your coffee, scrolling through the latest financial headlines. Suddenly, one headline makes you sit up a bit straighter: "CBIZ to Acquire Marcum LLP in $2.3 Billion Deal." You think, "Wait, what?" Yes, you read that right. CBIZ, the only publicly traded accountancy in the U.S., is joining forces with Marcum, a heavyweight in the accounting world known for its work with SPACs (Special Purpose Acquisition Companies). Talk about a power move!
So, what’s the lowdown? The transaction, a mix of cash and stock, will officially close in the fourth quarter of 2024, assuming everything gets the green light from CBIZ’s stockholders, Marcum’s partners, and the usual regulatory watchdogs. Marcum’s audit business, which makes up about 40% of its total revenue, will be integrated into Mayer Hoffman McCann P.C. (MHM), CBIZ’s assurance affiliate. This move keeps everything kosher with U.S. regulations requiring audit firms to be owned by professional accountants. Check out the press release from CBIZ for all the juicy details.
Founded in 1951 and based in New York, Marcum has become a giant in the industry, boasting more than 3,500 employees across 43 U.S. offices. They audit over 400 public companies, holding a solid 6% market share. Meanwhile, CBIZ, headquartered in Cleveland, Ohio, has been on a buying spree since 2008, gobbling up over 120 firms. With second-quarter revenues hitting $420 million in 2024 and a sprawling team of 10,000 across 33 states, CBIZ isn’t playing around.
Jeff Weiner, CEO of Marcum, and Jerry Grisko, President and CEO of CBIZ, have been hyping the merger’s potential. Weiner highlights the shared commitment to top-notch professional services and personalized client relationships, while Grisko emphasizes the deal’s historic significance for CBIZ. Together, they aim to ramp up their market presence, attract top talent, and drive innovation with new technology.
Now, let’s pull back the curtain on the industry context. The professional services sector has seen a flurry of mergers and acquisitions recently. Mid-tier firms like Grant Thornton and Baker Tilly have sold majority stakes to private equity, and both CBIZ and Marcum have been busy expanding their footprints. Earlier this year, CBIZ scooped up CompuData and Erickson, Brown & Kloster LLC, while Marcum acquired Croskey Lanni PC and others. It’s clear that firms are hustling to beef up their services and take on the Big Four: Deloitte, EY, KPMG, and PwC.
What’s in it for CBIZ? Acquiring Marcum is a game-changer. This merger not only boosts CBIZ’s market position but also significantly expands its service capabilities. With a combined team of over 10,000 professionals serving more than 135,000 clients, the new entity is a powerhouse. From tax and accounting to specialized services like technology solutions and executive search, the combined firm can offer an unparalleled range of services. This breadth and depth of expertise give CBIZ a competitive edge that’s tough to beat.
The scale of the combined firm also means greater operational efficiencies and cost savings, translating to improved service delivery for clients. Geographically, CBIZ’s reach will now extend further into key markets such as New York, Florida, and California, while also enhancing its presence in regions like Kansas City, Salt Lake City, and Denver. This wider footprint enables CBIZ to better serve existing clients and attract new business, driving revenue growth.
Innovation is another big win for CBIZ. By leveraging Marcum’s resources, CBIZ can invest in cutting-edge technologies and tools to enhance service delivery and client engagement. Staying ahead of industry trends with a commitment to innovation will help CBIZ maintain its competitive edge in the fast-evolving professional services landscape.
For Marcum, joining forces with CBIZ opens a treasure trove of opportunities. Access to CBIZ’s extensive resources and national support infrastructure will allow Marcum to deliver high-quality services to a broader client base. This integration is particularly beneficial for Marcum’s audit business, which will be part of MHM, ensuring compliance with regulatory requirements while benefiting from CBIZ’s robust administrative support.
Financial stability is another perk for Marcum. With CBIZ’s backing, Marcum can tackle larger, more complex projects and pursue strategic initiatives that were previously out of reach. The combined firm’s enhanced scale and reputation will also help attract and retain top talent, bolstering Marcum’s service capabilities.
Strategically, this merger aligns perfectly with Marcum’s growth strategy, historically driven by successful acquisitions. By joining forces with CBIZ, Marcum can continue expanding its market share and service offerings, positioning itself for sustained growth in the competitive accounting and advisory services market.
Looking at the bigger picture, the accounting profession is in a significant transformation. Technological advancements, regulatory pressures, and market consolidation are driving changes across the industry. The CBIZ-Marcum merger is a prime example of the broader trend toward consolidation, as firms seek to enhance their capabilities and achieve greater economies of scale.
What’s next for the accounting profession? Expect to see more mergers and acquisitions as mid-tier firms join forces or get snapped up to compete with the Big Four. Technological innovation will be key, with firms investing in advanced tools and systems to improve efficiency and meet clients’ evolving needs.
So, there you have it – the lowdown on one of the biggest deals in the professional services sector this year. The CBIZ-Marcum merger is set to create a powerhouse in the accounting world, offering an extensive range of services and unparalleled expertise. As the industry continues to evolve, strategic mergers like this one will play a crucial role in shaping the future of accounting and advisory services. Hope you enjoyed the story! Stay in the loop and get more juicy stories by subscribing to our newsletter.
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