XML 26 R16.htm IDEA: XBRL DOCUMENT v3.23.1
Business Combinations
 3 Months Ended
Mar. 31, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Combinations BUSINESS COMBINATIONS
Business Combinations
During the three months ended March 31, 2023, we completed the following acquisitions:
•Effective January 1, 2023, we acquired all of the assets of Danenhauer and Danenhauer, Inc, ("Danenhauer and Danenhauer"). Danenhauer and Danenhauer, based in California, is a provider of forensic accounting, business valuation, expert witness testimony, and other services for businesses and individuals. Danenhauer and Danenhauer is included as a component of our Financial Services practice group. Operating results are reported in the Financial Services practice group.
•Effective February 1, 2023, we acquired the non-attest assets of Somerset CPAs and Advisors ("Somerset"). Somerset, based in Indianapolis, IN, is a provider of a full range of accounting, tax, and financial advisory services to clients in a wide array of industries. Somerset is included as a component of our Financial Services practice group. Operating results are reported in the Financial Services practice group.
During the three months ended March 31, 2022, we completed the following acquisition:
•Effective January 1, 2022, we acquired all of the non-attest assets of Marks Paneth LLP ("Marks Paneth"). Marks Paneth, based in New York City, is a provider of a full range of accounting, tax and consulting services to a wide range of industries. Marks Paneth is included as a component of our Financial Services practice group. Operating results are reported in the Financial Services practice group.
The 2023 acquisitions are expected to add approximately $56.1 million annualized revenue in 2023. For the three months ended March 31, 2023, we recorded approximately $1.6 million in non-recurring transaction, retention and integration related costs associated with the Somerset acquisition. Pro forma results of operations for these acquisitions have not been presented because the effects of these acquisitions were not material, either individually or in aggregate, to our total revenue and net income for the three months ended March 31, 2023 and 2022, respectively.
The following table summarizes the consideration and purchase price allocation for the acquisitions completed during the three months ended March 31, 2023 and 2022, respectively (in thousands):
20232022
Common stock issued (number)102— 
Common stock value$4,795 $— 
Cash paid 38,972 72,469 
Recorded contingent consideration24,840 64,648 
Total recorded purchase price$68,607 $137,117 
Accounts receivable acquired7,040 18,230 
Fixed assets acquired1,201 1,793 
Identifiable intangible assets acquired22,518 48,000 
Operating lease right-of-use asset acquired14,598 49,291 
Other assets acquired1,126 1,497 
Operating lease liability acquired - current(1,012)(5,860)
Other current liabilities acquired(406)(909)
Operating lease liability acquired - non-current(13,586)(43,431)
Goodwill 37,128 68,506 
Total net assets acquired$68,607 $137,117 
Maximum potential contingent consideration$26,099 $67,115 
Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments. Fair value estimates of the 2023 acquisitions were provisional as of March 31, 2023, primarily related to the value established for certain identifiable intangible assets and contingent purchase price consideration.
The following table summarizes the goodwill and intangible asset amounts resulting from those acquisitions for the three months ended March 31, 2023 and 2022, respectively (in thousands):
Three Months Ended March 31,
20232022
Financial ServicesFinancial Services
Goodwill$37,128 $68,506 
Client list22,500 48,000 
Other intangibles18 — 
Total $59,646 $116,506 
Goodwill is calculated as the difference between the aggregated purchase price and the fair value of the net assets acquired. Goodwill represents the value of expected future earnings and cash flows, as well as the synergies created by the integration of the new businesses 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. Goodwill related to these acquisitions is deductible for tax purposes. Client lists from the aforementioned acquisitions have an expected life up to 10 years, and other intangibles, primarily non-compete agreements, have an expected life of 3 years. Client lists and non-compete agreements are valued using a discounted cash flow model based on management estimates of future cash flows from such assets.
The following table summarizes the changes in contingent purchase price consideration for previous acquisitions and contingent payments made for previous business acquisitions in the three months ended March 31, 2023 and 2022, respectively (in thousands):
Three Months Ended March 31,
20232022
Net expense$630 $642 
Cash settlement paid$28,434 $7,077 
Shares issued (number) 7019