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Acquisitions
 3 Months Ended
Mar. 31, 2012
Acquisitions [Abstract]  
Acquisitions
12. Acquisitions

On January 1, 2012, CBIZ acquired substantially all of the assets of Meridian Insurance Group, LLC (“Meridian”), which is headquartered in Boca Raton, Florida and has an office in Atlanta, Georgia. Meridian is an insurance brokerage specializing in multiple insurance products including property and casualty, bonding, personal lines and employee benefits. In addition, on February 1, 2012, CBIZ purchased an employee benefits and consulting client list. Both Meridian and the client list are included in the Employee Services practice group. Aggregate consideration for these acquisitions consisted of approximately $5.1 million in cash, $0.6 million in CBIZ common stock, $1.7 million in guaranteed future consideration, and $3.6 million in contingent consideration.

The preliminary aggregate purchase price for these acquisitions was allocated as follows (in thousands):

Recognized amounts of identifiable assets acquired and liabilities assumed:

 

         

Cash

   $ 307  

Identifiable intangible assets

     3,360  

Accrued liabilities

     (307 ) 
   

 

 

  

Total identifiable net assets

   $ 3,360  

Goodwill

     5,100  
   

 

 

  

Aggregate purchase price

   $ 8,460  
   

 

 

  

 

Under the terms of the Meridian acquisition agreement, a portion of the purchase price is contingent on future performance of the business acquired. The potential undiscounted amount of all future payments that CBIZ could be required to make under the contingent arrangement is between $27,250 and $1.7 million. CBIZ is required to record the fair value of this obligation at the acquisition date. CBIZ determined, utilizing a probability weighted income approach, that the fair value of the contingent consideration arrangement was $1.1 million, which was recorded in “Other non-current liabilities” in the consolidated balance sheet at March 31, 2012.

The goodwill of $5.1 million arising from the Meridian acquisition in the current year consists largely of expected future earnings and cash flow from the existing management team, as well as the synergies created by the integration of the new business within the CBIZ organization, including cross-selling opportunities expected with the Company’s Financial Services group and the Employee Services group, to help strengthen the Company’s existing service offerings and expand the Company’s market position. Goodwill recognized is deductible for income tax purposes.

In addition, CBIZ paid $15.6 million in cash and issued approximately 263,000 shares of common stock during the first quarter of 2012 as contingent earnouts for previous acquisitions. During the first quarter of 2012, CBIZ also reduced the fair value of the contingent purchase price liability related to CBIZ’s prior acquisitions by $0.3 million due to lower than originally projected future results of the acquired businesses. This reduction of $0.3 million is included in “Other income, net” in the consolidated statements of comprehensive income. Refer to Note 8 for further discussion of contingent purchase price liabilities.

During the first quarter of 2011, CBIZ did not acquire any businesses or client lists. CBIZ paid $11.3 million in cash and issued approximately 265,000 shares of common stock during the first quarter of 2011 as contingent earnouts for previous acquisitions. In addition, during the first quarter of 2011, CBIZ reduced the fair value of the contingent purchase price liability related to CBIZ’s prior acquisitions by $1.2 million due to lower than originally projected future results of the acquired businesses. This reduction of $1.2 million is included in “Other income, net” in the consolidated statements of comprehensive income. See Note 8 for further discussion of contingent purchase price liabilities.

The operating results of these businesses are included in the accompanying consolidated financial statements since the dates of acquisition. Client lists and non-compete agreements are recorded at fair value at the time of acquisition. The excess of purchase price over the fair value of net assets acquired, (including client lists and non-compete agreements) is allocated to goodwill.

Additions to goodwill, client lists and other intangible assets resulting from acquisitions and contingent consideration earned on prior period acquisitions during the three months ended March 31, 2012 and for contingent consideration earned on prior period acquisitions during the three months ended March 31, 2011 were as follows (in thousands):

 

                 
    Three Months Ended
March 31,		  
    2012     2011  

Goodwill

   $ 5,597     $ 21  
   

 

 

    

 

 

  

Client lists

   $ 5,603     $ 108  
   

 

 

    

 

 

  

Other intangible assets

   $ 140     $ —