Accounting and financial services provider LECG plans to merge with Smart Business Advisory & Consulting in a deal valued at $25 million in cash and $39.9 million in stock.
LECG offers services in economics, finance and accounting, while Smart brings consultants and a number of Fortune 200 clients to the deal. Smart earns approximately $100 million in revenues from its financial advisory and business consulting practices, including technology, business process improvement, compensation, benefits, accounting, actuarial and tax. The firm focuses on the banking, insurance, real estate, health care, education and public sectors.
This is huge for both firms in that it rounds out their platform and makes them a true integrated services platform in their niches, said Allan Koltin, CEO of the Chicago consultancy PDI Global. This is very similar to what we saw the Big Eight do many years ago when they merged firms and ultimately became the Big Five.
Smart CEO Steve Samek, 56, will become CEO of the combined company and a member of the board of directors upon completion of the merger, replacing Michael Jeffery, who announced in July that he would be stepping down as LECG's CEO. Samek is a 35-year veteran of the consulting, business advisory and accounting industry and was a managing partner at Arthur Andersen.
"We believe this merger is a transformational event for LECG and potentially the professional services industry, said Jeffery in a statement.
As part of the deal, LECG will receive a $25 million cash investment from Smarts majority shareholder, Great Hill Partners, and LECG will issue approximately 10.9 million shares of common stock having a value of $39.9 million to acquire all of Smarts outstanding shares. LECG will also issue approximately 6.3 million shares of preferred stock at $3.96 per share in exchange for a $25 million cash investment in the combined company.
The deal is expected to close in the fourth quarter. When its completed, Great Hill Partners will own approximately 40 percent of the outstanding voting power of the new company, which will retain the name LECG.
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