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Forvis’ $5bn merger with Mazars US

By Ahaan Roychowdhury, Krish Raj, Diti Shah, Shyam Patra and Dimos Kamposioras (UCL) ; Enrique Pérez-Hernández, Taha Yassine, Tarvo Simons, Michael Ten Eicken and Juan Pelaez (IE)

Photo: Scott Graham (Unsplash)


Overview of the deal

Acquirer: Mazars

Target: Forvis (retains autonomy)

Total Transaction Size: $5 billion

Announcement date: November 15th, 2023

Closed date: June 1st 2024

Target advisor: n/a

Acquirer advisor: n/a

On November 15, 2023, Forvis announced a transformative merger with Mazars, a global leader operating in over 100 countries and territories. Mazars, an internationally integrated partnership specializing in audit, accountancy, advisory, tax, and legal services, contributes its extensive global reach and the collective expertise of 34,000 professionals to this unique collaboration. This strategic alignment positions Forvis Mazars as a dynamic new entrant in the top 10 global network rankings, emphasizing agility, consistency, and global scale to meet diverse client needs.

The merger highlights evident synergies, aiming to establish a network comprising just two members, uniquely designed for agility and consistency while possessing the global scale necessary to address evolving client needs. The agreement will give Forvis, which predominantly operates in the US, a presence in international markets while the Paris-based Mazars will gain a stronger position in the US, where the firm has struggled to gain a significant foothold, after first entering the market in 2010. The merger will provide a breath of fresh air at a time when Mazars USA has slipped down the rankings of US accounting firms by revenue, from 24th five years ago to 30th today with a little over $260mn in annual revenue. Crucially, both Forvis and Mazars will maintain autonomy and ownership within the newly formed entity, preserving the advantages of the merged global network while retaining the strengths of Mazars' integrated partnership and Forvis's current ownership model.

“A two-firm network, operating under a single global brand, quickly advances our firms’ shared strategies. It's an opportunity to better serve our clients, especially those with international needs, and support our people on a path of continued growth. Our organizations know each other well, with a strong history of collaboration and very similar cultures of putting our people and clients first,” - Tom Watson, CEO (FORVIS)

Company Details (Acquirer - Mazars)

Mazars is a Paris-based integrated partnership that specialises in audits, accounting and consultancy. The firm has a strong international presence, operating in 95 countries with over 47,000 employees worldwide. Notable clients in the past include Goldman Sachs and the Trump Organisation.

Founded in: 1945, headquartered in Paris, France

CEO: Hervé Hélias

Fee Income FY22: €2.45 Bn

Year-on-Year Growth: +16.4%

FY 22 Revenue: £287.8 mm

Recent Transactions: Advising on the sale of Ecofficiency Limited, Conducted due diligence for IMPACT Partners, Advised on the buy-out of Boston MFO

Company Details (Target - Forvis)

Forvis, LLP is an American accounting firm with a strong international presence. Formed by the merger of two Top 25 (Top 25 highest ranking accounting firms in America) Firms, BKD CPAs & Advisors and Dixon Hughes Goodman, Forvis has rapidly grown to become one of the largest public accounting firms in the United States. Forvis specialises in providing assurance, tax, and consulting services across all 50 states and globally. They are especially known for their commitment to delivering an exceptional client experience.

Founded in 2022, headquartered in Springfield, Missouri, USA

CEO: Tom Watson

Number of employees: 5.500 (as of 2022)

Market Cap: N/A (privately held)

LTM Revenue: $1.69bn (LTM May 2023)

Projections and Assumptions

Short-term consequences

Mazars merger with Forvis will create a new global top ten audit and advisory network with around $5bn in revenue. The global network will be overseen by a new global board, including an equal number of senior partners from both firms with a three-year rotating chair. However, both firms will continue to remain owned by their current respective partnerships. Forvis Mazars will operate as a two-firm network under a single global brand which will allow for continued global growth by expanding their capabilities to serve clients, especially those with international needs. The network is designed to be agile, deliver consistency and have the global scale to meet clients’ needs. The merger comes at a time when firms are responding to the industry trend of consolidation for scale and technological advancement amidst slowing service demand. As well as, following a trend of mergers in this space due to increasing labour and technology costs is pushing companies to seek economies of scale to compete.

A key strategic reason for this deal is to give Forvis a presence in international markets and in turn, Mazars will gain a stronger position in the US, where the firm had struggled to initially penetrate after first entering the market in 2010. Both companies have a strong history of collaboration and very similar cultures of putting people and clients first, which complements Forvis’s existing international integrated partnership and significantly advances Mazars’ international strategy. This partnership represents the start of their new global presence.

Long-term Upsides

The acquisition indicates significant long-term impacts across various dimensions. In terms of earnings, the combined entity's projected annual revenue of approximately $5 billion positions it as a major player in the global accounting and consulting industry. The consolidation is expected to bring about sustained revenue growth and enhanced profitability over the long term, reflecting positively on both firms.

Environmental, Social, and Governance (ESG) considerations are addressed through the collaborative approach of the two firms, aligning with global trends toward sustainability. The creation of a top 10 global audit and advisory network, under the brand Forvis Mazars, emphasises a commitment to a unified and responsible business model, enhancing their standing in the industry.

The growth prospects for the accounting and consulting industry are promising, given the strategic alliance's expanded capabilities and global reach. Forvis Mazars is well-positioned to capitalise on emerging sectors, such as the energy transition and life sciences, contributing to the overall growth and relevance of the industry.

The likelihood of realising cost/revenue synergies is high, given the complementary expertise, shared strategies, and collaborative history of Forvis and Mazars. The planned consolidation of offices and the creation of a two-firm network under a single global brand support economies of scale, operational efficiency, and positive financial performance. This strategic move reflects a proactive response to industry challenges, offering a transformative and positive outlook for Forvis Mazars in the long term. Overall, the merger positions the firms strategically, fostering growth, industry relevance, and financial success in the coming years.

Risks and Uncertainties

The merger offers a lot of opportunities for both companies, trying to mark a significant shift in the global accounting and audit industry. Despite these opportunities, the deal also involves various risks and uncertainties.

While the merger is expected to create synergies that drive growth, efficiency and innovation, there is a risk of overestimating these benefits. The network must demonstrate its capacity to tackle current business challenges and anticipate future trends. Even though Mazar currently mostly operates outside of the U.S., it still has 1,120 people staffed within it. However, Mazars’ ranking and reputation in the U.S. has recently slipped down from 24th to 30th. Specifically Mazars’ work for former president and client Donald Trump has attracted unwanted attention to the company, with even partners of Mazars being deeply implicated in a trial concerning alleged fraud against Trump. This followed despite creating a “North American Alliance” in 2019, aiming to improve Mazars’ ability to work for multinational clients. While the merger with Forvis - a company among the top 10 accounting firms by revenue in the U.S. - is now trying to address these difficulties, it might be a burden to fully overcome the recent issues faced in the U.S..

Additionally, a significant risk lies in the integration of corporate cultures across both companies. While the strategic union promises expansive global reach and enhanced capabilities, harmonising the distinct corporate cultures of Mazars, with its international footprint, and Forvis, deeply rooted in the U.S., presents a unique challenge. The successful blending of these cultures is crucial for employee morale, client satisfaction, and the overall synergy of the newly formed entity. Failure to effectively integrate these cultures could lead to internal discord, reduced productivity, and a potential decline in service quality, undermining the strategic objectives of the merger.

“I am really delighted that Mazars and FORVIS have taken this transformational step and am excited about the opportunities it presents for both firms in serving our clients and supporting our people” - Hervé Hélias, CEO and Chairman (Mazars Group)



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