In a significant development within the US accounting industry, CBiz, America’s only publicly traded accountancy firm, has announced its acquisition of Marcum, a prominent player that audits more US-listed companies than any firm outside the Big Four.
The deal, valued at $2.3 billion, is set to further consolidate the accounting profession as firms seek to expand their market share and service capabilities.
Details of the acquisition
CBiz disclosed on Wednesday that it would acquire Marcum for $2.3 billion, with the payment structure comprising approximately half in cash and half in stock.
This strategic move will create the seventh-largest accounting firm in the US, with combined annual revenues of $2.8 billion.
The merger represents a significant step for CBiz, positioning it as a major competitor in the industry.
Marcum currently audits over 400 US public companies, holding a market share of 6%, according to Ideagen Audit Analytics.
The firm’s client base includes numerous special purpose acquisition companies (Spacs), which have been a significant revenue driver during the Spac boom of the past four years.
However, Marcum’s involvement in the Spac market has not been without controversy, as the firm faced a $13 million fine from regulators last year due to quality failures related to its Spac work.
Consolidation wave in the accounting industry
The acquisition is a notable example of the ongoing consolidation trend in the accounting sector, driven by the need for firms to scale up and enhance their service offerings amid increasing regulatory scrutiny and market complexities.
By merging with Marcum, CBiz aims to leverage Marcum’s extensive client base and industry expertise to bolster its market position and service capabilities.
The combined entity is expected to offer a broader range of services and improved resources, potentially attracting more clients and increasing its market share.
This consolidation is likely to trigger further mergers and acquisitions in the industry as firms strive to stay competitive and meet the evolving demands of their clients.
There could be regulatory challenges though
While the acquisition presents significant growth opportunities, it also comes with challenges. Marcum’s recent regulatory issues highlight the importance of maintaining high audit quality and compliance standards.
The new combined firm will need to address these concerns to ensure sustained trust and credibility in the market.
The deal also underscores the dynamic nature of the accounting profession, where firms must continuously adapt to regulatory changes and market conditions.
As the industry evolves, the ability to integrate and streamline operations will be crucial for the success of such large-scale mergers.
CBiz’s acquisition of Marcum for $2.3 billion marks a pivotal moment in the US accounting industry, creating the seventh-largest firm by revenue.
This merger is a clear indicator of the consolidation wave sweeping the profession, driven by the need for enhanced service capabilities and market positioning.
As the combined entity navigates regulatory and market challenges, its success will depend on its ability to maintain high standards and leverage the strengths of both firms.
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