CBIZ is acquiring Tofias in a deal estimated at $55 million as the accounting provider expands its reach across the Northeast to the New England area.
As part of the deal, Cleveland-based CBIZ is acquiring the non-attest part of Cambridge, Mass.-based Tofias, while CBIZ's affiliated accounting firm, Mayer Hoffman McCann, will acquire the attest practice. The deal is expected to close on Dec. 31.
CBIZ's latest acquisition comes less than a month after it acquired Mahoney Cohen in a bid to expand its reach to New York (see CBIZ Acquires Mahoney Cohen). CBIZ ranked eighth on Accounting Today's 2008 list of the Top 100 Firms, with $500.72 million in annual revenue, while Tofias ranked 78th, with $37.5 million in annual revenue.
However, the acquisitions of both Mahoney Cohen and Tofias are expected to boost CBIZ's fee base by $100 million, according to Allan Koltin, CEO of the Chicago consultancy PDI Global, who served as principal advisor to both firms on the acquisitions. He believes that CBIZ's revenue could grow by $200 million or $300 million over the next three or four years.
"They have gone from somewhat nonexistent in the M&A area to today becoming the go-to firm in terms of large CPA firm acquisitions," he said. "I would not be surprised to see one or two more significant deals closed by CBIZ in the first six months of 2009." He added that those deals probably won't occur until after tax season.
The Tofias deal is expected to contribute approximately $38 million in revenue and $0.04 in earnings per share to CBIZ in 2009. The firm will be adding about 28 partners and over 200 associates with the acquisition. Tofias has offices in Cambridge and New Bedford, Mass., and Providence and Newport, R.I.
"Their talent is a great boost," said CBIZ Financial Services president David Sibits (pictured). "They have a young leadership group. They're very well run and have a good process and good operations."
Koltin said he would miss the firm's annual retreats, which he has organized for the past three or four years. He pointed out that the firm was the first Top 100 Firm with a non-CPA leader, managing director Tracy Gallagher. He also noted that both Tofias and Mahoney Cohen belonged to the same accounting firm association, BKR International, although Mahoney Cohen has left BKR to join another association, Moore Stephens International. "They are already familiar with each other's partners and service lines so those two firms clearly will have a significant head start in terms of working together," he said.
CBIZ anticipates more acquisitions in the future. "We continue to look for opportunities that will make us better for our clients and more valuable for our shareholders," said Sibits.
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