12.	Acquisitions

The cost of an acquisition is measured at the fair value of the consideration transferred, including contingent consideration. Acquisition-related costs are recognized as an expense in the period in which they are incurred. The identifiable assets acquired, liabilities assumed and contingent consideration are measured at their fair values at the date of acquisition. Goodwill is measured as the excess of the aggregate of the consideration transferred over the net of the amounts of identifiable assets acquired and liabilities assumed. A significant portion of the goodwill is deductible for income tax purposes. The operating results of acquired businesses are included in the accompanying consolidated financial statements beginning on the date of acquisition.

During the nine months ended September 30, 2016, CBIZ acquired substantially all of the non-attest assets of four businesses:

First quarter 2016

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Effective January 1, 2016, CBIZ acquired Millimaki Eggert, L.L.P., (“Millimaki”), located in San Diego, California. Millimaki provides professional tax, accounting, and financial services, with a specialty niche practice in the real estate sector, to closely held businesses, their owners, and mid-to-high net worth individuals. Annualized revenue attributable to Millimaki is estimated to be approximately $2.4 million. Operating results attributable to Millimaki are reported in the Financial Services practice group.

Second quarter 2016

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Effective April 1, 2016, CBIZ acquired The Savitz Organization, (“Savitz”), headquartered in Philadelphia, Pennsylvania with offices in Atlanta, Georgia, and Newton, Massachusetts. Savitz is an employee retirement and health and welfare benefits firm that provides actuarial, consulting and administration outsourcing services. Annualized revenue attributable to Savitz is estimated to be approximately $20.0 million. Operating results attributable to Savitz are reported in the Employee Services practice group.

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Effective June 1, 2016, CBIZ acquired Flex-Pay Business Services, Inc., (“Flex-Pay”), located in Winston-Salem, North Carolina. Flex-Pay provides payroll processing, Affordable Care Act fulfillment, and human resource solutions to more than 3,600 clients primarily in the Southeast. Annualized revenue attributable to Flex-Pay is estimated to be approximately $10.0 million. Operating results attributable to Flex-Pay are reported in the Employee Services practice group.

Third quarter 2016

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Effective July 1, 2016, CBIZ acquired Ed Jacobs & Associates, Inc. (“EJ&A”), located in Cleveland, Tennessee. EJ&A is an employee benefits consulting business with annualized revenue of approximately $2.1 million. Operating results attributable to EJ&A are reported in the Employee Services practice group.

Pro forma results of operations for these acquisitions have not been presented because the effects of the acquisitions, individually or in the aggregate, were not significant to the Company’s results.

Aggregate consideration for these acquisitions consisted of approximately $36.7 million in cash consideration, $1.6 million in CBIZ common stock and $17.8 million in contingent consideration.

The estimated fair values of the assets acquired and the liabilities assumed during the nine months ended September 30, 2016 are as follows (in thousands):

	Nine Months Ended
	September 30, 2016
Cash	$	6
Accounts receivable, net		5,436
Funds held for clients		37,230
Property and equipment, net		379
Other assets		172
Identifiable intangible assets		19,557
Current liabilities		(415	)
Client fund obligations		(37,230	)
Total identifiable net assets	$	25,135
Goodwill		30,927
Aggregate purchase price	$	56,062

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Under the terms of the acquisition agreements, a portion of the purchase price is contingent on future performance of the businesses acquired.

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Utilizing a probability weighted income approach, CBIZ determined that the fair value of the contingent consideration arrangements for the acquisitions occurring in the first nine months of 2016 was $17.8 million, of which $5.3 million was recorded in “Contingent purchase price liability – current” and $12.5 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets at September 30, 2016.

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The goodwill of $30.9 million arising from the acquisitions in the first nine months of 2016 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 businesses 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.

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The goodwill of $30.9 million from acquisitions in the first nine months of 2016 is reported under the Employee Services operating segment ($29.9 million) and the Financial Services operating segment ($1.0 million).

Client lists

During the nine months ended September 30, 2016, CBIZ purchased six clients lists, five of which are reported in the Employee Services practice group and one in the Financial Services practice group. Total consideration for these client lists was $0.8 million in cash consideration, $1.2 million of guaranteed future consideration and $0.7 million of contingent consideration.

Change in contingent purchase price liability for previous acquisitions

During the nine months ended September 30, 2016, CBIZ decreased the fair value of the contingent purchase price liability related to prior acquisitions by $0.9 million due to lower than originally projected future results of the acquired businesses. This decrease is included in “Other income, net” in the accompanying Consolidated Statements of Comprehensive Income.

Contingent earnouts for previous acquisitions

CBIZ paid $5.7 million in cash and issued approximately 220,000 shares of CBIZ common stock during the nine months ended September 30, 2016 for previous acquisitions.

During the nine months ended September 30, 2015, CBIZ acquired substantially all of the assets of one business:

First quarter 2015

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Effective March 1, 2015, CBIZ acquired Model Consulting, Inc. (“Model”), located in Trevose, Pennsylvania. Model provides employee benefit consulting services to mid-sized companies in the Philadelphia and Southern New Jersey markets. Operating results attributable to Model are reported in the Employee Services practice group.

Aggregate consideration for this acquisition consisted of approximately $5.5 million in cash consideration and $4.2 million in contingent consideration.

The estimated fair values of the assets acquired and the liabilities assumed during the nine months ended September 30, 2015 are as follows (in thousands):

	Nine Months Ended
	September 30, 2015
Cash	$	—
Accounts receivable, net		—
Work in process, net		—
Other assets		—
Identifiable intangible assets		2,844
Current liabilities		—
Total identifiable net assets	$	2,844
Goodwill		6,865
Aggregate purchase price	$	9,709

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Under the terms of the acquisition agreements, a portion of the purchase price is contingent on future performance of the businesses acquired.

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Utilizing a probability weighted income approach, CBIZ determined that the fair value of the contingent consideration arrangements for the acquisitions occurring in the first nine months of 2015 was $4.2 million, of which $1.6 million was recorded in “Contingent purchase price liability – current” and $2.6 million was recorded in “Contingent purchase price liability – non-current” in the accompanying Consolidated Balance Sheets at September 30, 2016.

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The goodwill of $6.9 million arising from the acquisition in the first nine months of 2016 consist largely of expected future earnings and cash flows from the existing management team, as well as the synergies created by the integration of the new businesses 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.

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The goodwill of $6.9 million arising from the acquisition in the first nine months of 2015 is reported under the Employee Services operating segment.

Client lists

During the first nine months of 2015, CBIZ purchased five client lists, all of which are reported in the Employee Services practice group. Total consideration for these client lists was $0.3 million in cash consideration, $0.8 million in guaranteed future consideration and $3.0 million in future consideration.

Change in contingent purchase price liability for previous acquisitions

During the nine months ended September 30, 2015, CBIZ decreased the fair value of the contingent purchase price liability related to prior acquisitions by $3.1 million due to lower than originally projected future results of the acquired businesses. This decrease is included in “Other income, net” in the accompanying Consolidated Statements of Comprehensive Income.

Contingent earnouts for previous acquisitions

During the nine months ended September 30, 2015, CBIZ paid $7.8 million in cash and issued approximately 215,000 shares of CBIZ common stock.