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Acquisitions | 9 Months Ended
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Sep. 30, 2019
Business Combinations [Abstract] |
Acquisitions | Note 14. Acquisitions Our acquisition strategy focuses on businesses with a leadership team that is committed to best in class culture, extraordinary client service and cross-serving potential. CBIZ has a long history of acquiring businesses that share common cultural values with us and provide value-added services to the small and midsize business market. The valuation of any business is a subjective process and includes industry, geography, profit margins, expected cash flows, client retention, nature of recurring or non-recurring project-based work, growth rate assumptions and competitive market conditions. Business Acquisitions in 2019 During the nine months ended September 30, 2019, we have acquired substantially all of the assets of the following businesses:
| • | Effective January 1, 2019, we acquired substantially all of the assets of Wenner Group, LLC (“Wenner”), located in Denver, Colorado. Wenner is a full service accounting, tax, compliance and financial consulting firm. Wenner is included as a component of our Financial Services practice group.
| • | Effective July 1, 2019, we acquired substantially all of the assets of Paydayta, Inc. (d.b.a. Paytime) (“Paytime”), an Ohio-based payroll service provider. Paytime is included as a component of our Benefit and Insurance Services practice group.
| • | Effective July 1, 2019, we acquired substantially all of the assets of Gavion, LLC (“Gavion”), a registered investment advisor based in Memphis, Tennessee. Gavion provides investment consulting services to a diverse base of institutional clients. Gavion is included as a component of our Benefit and Insurance Services practice group.
| • | Effective August 1, 2019, we acquired substantially all of the assets of QBA Benefits, LLC. (“QBA”), an employee benefits agency based in Cleveland, Ohio. QBA provides employee benefits related services to small and mid-sized clients across multiple industries such as services, technology, energy, and manufacturing. QBA is included as a component of our Benefit and Insurance Services practice group.
| • | Effective August 1, 2019, we acquired substantially all of the assets of Ericson CPAs (“Ericson”), an accounting firm based in San Luis Obispo, California. Ericson provides tax compliance, consulting, and planning services to a diverse base of clients. Ericson is included as a component of our Financial Services practice group.
| • | Effective September 1, 2019, we acquired substantially all of the assets of Brinig Taylor Zimmer, Inc. (“BTZ”), a specialized financial consulting firm based in San Diego, California. BTZ provides forensic accounting, litigation consulting and business valuation services to a wide range of clients from individual to small business and large public traded entities. BTZ is included as a component of our Financial Services practice group.
Aggregated consideration for these six acquisitions consisted of approximately $19.4 million in cash (including $6.9 million acquired client funds and $0.8 million cash acquired), $2.0 million in our common stock, and $11.2 million in contingent considerations. The maximum potential undiscounted amount of all future payments that we could be required to make under the contingent arrangements is $11.6 million. As of September 30, 2019, the aggregated fair value of the contingent considerations related to these acquisitions was $10.3 million, of which $2.9 million was recorded in “Contingent purchase price liability – current” and $7.4 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets at September 30, 2019. Refer to Note 10. Fair Value Measurements, for additional information regarding contingent purchase price liability fair value and fair value adjustments. Annualized aggregated revenue for these acquisitions is estimated to be approximately $17.4 million. Pro forma results of operations for these acquisitions are not presented because the effects of these acquisitions were not significant either individually or in aggregate to our consolidated “Income from continuing operations before income taxes.” Business Acquisitions in 2018 During the nine months ended September 30, 2018, we acquired substantially all of the assets of two businesses; InR Advisory Services, LLC (“InR”), effective April 1, 2018, and Laurus Transaction Advisors, LLC (“Laurus”), effective February 1, 2018. InR, located in Media, Pennsylvania, provides investment advisory services for public and private sector clients and non-profit organizations. Operating results of InR are reported in the Benefits and Insurance Services practice group. Laurus, located in Denver, Colorado, provides financial and accounting due diligence and advisory services with respect to mergers and acquisition transactions to private equity groups and public and private sector companies. Operating results for Laurus are reported in the Financial Services practice group. Aggregate consideration for the InR and Laurus acquisitions consisted of approximately $23.4 million in cash consideration, $0.9 million in CBIZ common stock and $12.4 million in contingent consideration. Under the terms of these acquisition agreements, a portion of the purchase price is contingent on future performance of the business acquired. The maximum potential undiscounted amount of all future payments that we could be required to make under the contingent arrangements is $12.4 million, of which $3.4 million was recorded in “Contingent purchase price liability – current” and $9.0 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets at September 30, 2018. Refer to Note 10. Fair Value Measurements, for additional information regarding contingent purchase price liability fair value and fair value adjustments. Annualized revenue for these acquisitions is estimated to be approximately $9.1 million. Pro forma results of operations for these acquisitions have not been presented because the effects of the acquisitions were not significant either individually or in aggregate to our consolidated “Income from continuing operations before income taxes.” The following table summarizes the amounts of identifiable assets acquired, liabilities assumed and aggregate purchase price for the acquisitions for the nine months ended September 30, 2019 and 2018 (in thousands):
|  | Nine Months Ended |
|  | September 30, |
|  | 2019 |  |  | 2018 |
Cash |  | $ | 826 |  |  | $ | 306 |
Accounts receivable, net |  |  | 1,843 |  |  |  | 1,920 |
Funds held for clients |  |  | 6,878 |  |  |  | — |
Operating lease right-of-use asset, net |  |  | 2,789 |  |  |  | — |
Other assets |  |  | 99 |  |  |  | 12 |
Identifiable intangible assets |  |  | 7,725 |  |  |  | 3,864 |
Operating lease liability - current |  |  | (1,013 | ) |  |  | — |
Other current liability |  |  | (2,245 | ) |  |  | (1,717 | )
Operating lease liability - noncurrent |  |  | (1,776 | ) |  |  | — |
Client fund obligations |  |  | (6,878 | ) |  |  | — |
Total identifiable net assets |  | $ | 8,248 |  |  | $ | 4,385 |
Goodwill |  |  | 24,369 |  |  |  | 32,255 |
Aggregate purchase price |  | $ | 32,617 |  |  | $ | 36,640 |
The goodwill of $24.4 million and $32.3 million arising from the acquisitions for the nine months ended September 30, 2019 and 2018, respectively, primarily results from expected future earnings and cash flows from the existing management team, as well as the synergies created by the integration of the new business within our organization, including cross-selling opportunities expected with our Financial Services practice group and the Benefits and Insurance Services practice group, to help strengthen our existing service offerings and expand our market position. All of the goodwill is deductible for income tax purposes. Acquisitions of Client Lists During the nine months ended September 30, 2019, we purchased one client list, reported in the Benefits and Insurance Services practice group, for $0.3 million, which included $0.2 million in contingent consideration. During the nine months ended September 30, 2018, we purchased one client list, reported in the Financial Services practice group, for $0.3 million in contingent consideration. Change in Contingent Purchase Price Liability for Previous Acquisitions During the nine months ended September 30, 2019 and 2018, the fair value of the contingent purchase price liability related to prior acquisitions increased by $0.3 million and $3.3 million, respectively. The change in fair value during the nine months ended September 30, 2019 is mostly attributable to the change in stock price related to the mark-to-market adjustment of future common stock issuances and net present value adjustments, offset by subsequent measurement adjustments based on projected future results of the acquired businesses, while the change in fair value for the nine months ended September 30, 2018 is mostly attributable to the change in stock price related to the mark-to-market adjustment of future common stock issuances. These adjustments are included in “Other income (expense), net” in the accompanying Consolidated Statements of Comprehensive Income. Contingent Payments for Previous Business Acquisitions and Client Lists We paid $16.3 million in cash and issued approximately 98,000 shares of our common stock during the nine months ended September 30, 2019 for previous acquisitions. For the same period in 2018, we paid $11.0 million in cash and issued approximately 66,000 shares of our common stock for previous acquisitions. During the nine months ended September 30, 2019 and 2018, we paid approximately $0.7 million and $1.1 million, respectively, in cash for previous client list purchases.

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