Accounting firm CBIZ urged by activist investor to pursue M&A

A CBIZ Inc. shareholder is urging the accounting firm to re-evaluate its capital allocation, abandon a share buyback plan and return to pursuing acquisitions, according to a letter sent to the company.

Reference Equity, a long-only fund, said CBIZ's management is buying back stock at the wrong time while putting M&A, which has been the firm's growth engine, on hold, according to Ryan Bunn, the fund's portfolio manager. Reference Equity, which sent a letter and a presentation to CBIZ Chief Executive Officer Jerry Grisko and Chairman Rick Burdick last month, plans to go public with its campaign Tuesday.

Denver-based Reference Equity is proposing that CBIZ raise equity to restart accretive deals, according to the letter reviewed by Bloomberg News. 

"CBIZ has a unique value proposition," according to a brief, also reviewed by Bloomberg News, that outlined the campaign thesis. "Our proposal is focused on enabling and enhancing these core capabilities."

Shares of CBIZ have declined 52% in the past year, giving it a market value of $1.9 billion. Including debt, the Cleveland-based company is valued at about $3.9 billion, according to data compiled by Bloomberg.

Reference Equity said equity-financed M&A was a lower risk and better strategic fit for the company, even though share repurchases can bring strong returns, according to the letter. The fund added that equity-financed deals can help CBIZ become an industry-leading acquirer and seed growth for the next decade.

A representative for CBIZ didn't immediately respond to a request for comment.

CBIZ's board in February extended a stock repurchase program that allows the firm to buy back up to 5 million shares using operating cash flows and credit through March of next year. The company said in its latest quarterly report in March that repurchasing stock "can be an attractive use of capital and an efficient means to provide value to our stockholders."

The company said in the filing that its primary objective is to fund organic growth acceleration and meet working capital needs and secondly to pay down debt. The company added that it "will also remain focused on making strategic acquisitions that allow us to strengthen our presence in existing markets, expand into high growth industries, and broaden our services to our clients."

CBIZ provides full-service professional services, such as accounting, HR and advisory, to primarily middle-market businesses in the US. The firm has been using acquisitions to grow over the past few years. CBIZ acquired Marcum LLP in a $2.3 billion deal in 2024, making it one of the largest accounting providers in the US.

Reference Equity's Bunn said the firm is publicly disclosing its campaign now "out of love for the business." CBIZ will be weaker if it continues to do buybacks as the rest of the accounting industry moves to invest in and consolidate around artificial intelligence, he said. 

"Philosophically, it's a crucial moment," Bunn said. "They need to support their long-term business model, instead of just pursuing the highest mathematical return today."