XML 27 R16.htm IDEA: XBRL DOCUMENT v3.23.3
Business Combinations
 9 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Business Combinations BUSINESS COMBINATIONS
Business Combinations
During the nine months ended September 30, 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. Operating results for Danenhauer and Danenhauer 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, Indiana, is a provider of a full range of accounting, tax, and financial advisory services to clients in a wide array of industries. Operating results for Somerset are reported in the Financial Services practice group.
•Effective June 1, 2023, we acquired all of the assets of Pivot Point Security ("PPS"). PPS, based in Hamilton, New Jersey, is a provider of cyber and information security, and compliance services for small and middle market businesses. Operating results for PPS are reported in the Financial Services practice group.
•Effective June 1, 2023, we acquired all of the assets of Ickovic and Co. PC ("Ickovic and Co."). Ickovic and Co., based in Denver, Colorado, is a provider of bespoke services and solutions for high-net-worth individuals, business owners and executives. Operating results for Ickovic and Co. are reported in the Financial Services practice group.
•Effective July 1, 2023, we acquired all of the assets of American Pension Advisors, Ltd. ("APA"). APA, based in Indianapolis, Indiana, is a provider of full-service retirement plan consulting and administration assisting more than 1,200 clients in the design, implementation, and administration of all types of retirement plans including 401(k), 403(b), 457(b), defined benefit and cash balance. Operating results for APA are reported in the Benefits and Insurance Services practice group.
During the nine months ended September 30, 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.
•Effective July 1, 2022, we acquired substantially all the assets of Stinnett & Associates, LLC ("Stinnett"). Stinnett, located in Tulsa, Oklahoma, is a professional advisory firm and certified Women's Business Enterprise providing internal audit, Sarbanes-Oxley compliance, cybersecurity reviews, business continuity and disaster recovery, and fraud investigations to businesses of all sizes including Fortune 1000 organizations in a variety of industries. Operating results are reported in the Financial Services practice group.
The acquisitions of Danenhauer and Danenhauer, Somerset, PPS, Ickovic and Co., and APA (together, the “2023 Acquisitions”) are expected to add approximately $67.3 million annualized revenue in 2023. For the nine months ended September 30, 2023, we recorded approximately $3.1 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 and nine months ended September 30, 2023 and 2022, respectively.
The following table summarizes the consideration and purchase price allocation for the acquisitions completed during the nine months ended September 30, 2023 and 2022, respectively (in thousands):
20232022
Common stock issued (number)10242 
Common stock value$4,796 $1,668 
Cash paid 53,027 79,141 
Recorded contingent consideration32,142 74,199 
Total recorded purchase price$89,965 $155,008 
Accounts receivable acquired8,539 20,429 
Fixed assets acquired1,108 1,933 
Identifiable intangible assets acquired35,267 53,400 
Operating lease right-of-use asset acquired14,972 49,291 
Other assets acquired1,163 1,693 
Operating lease liability acquired - current(1,080)(5,860)
Other current liabilities acquired(1,366)(1,594)
Operating lease liability acquired - non-current(13,892)(43,431)
Goodwill 45,254 79,147 
Total net assets acquired$89,965 $155,008 
Maximum potential contingent consideration$33,845 $77,075 
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 September 30, 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 nine months ended September 30, 2023 and 2022, respectively (in thousands):
Nine Months Ended September 30,
20232022
Financial ServicesBenefits and Insurance Services Financial ServicesBenefits and Insurance Services
Goodwill$41,322 $3,932 $79,147 $— 
Client list33,196 2,053 53,400 — 
Other intangibles18 — — — 
Total $74,536 $5,985 $132,547 $— 
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 and nine months ended September 30, 2023 and 2022, respectively (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net expense$626 $440 $2,071 $1,917 
Cash settlement paid$10,103 $4,167 $39,910 $12,289 
Shares issued (number) 5426 12945
Divestitures and Sales of Assets
Sales of assets are recorded as "Other (expense) income, net” in the accompanying Consolidated Statements of Comprehensive Income. During the three and nine months ended September 30, 2023, we recorded a gain of $1.4 million and $1.5 million, respectively, related to the sale of one technology asset in the Financial Services practice group. During the three and nine months ended September 30, 2022, we sold one book of business for $2.5 million in the Benefits and Insurance Services practice group and recorded a gain of $2.4 million.