What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-26 · 74 added, 49 removed, 92 unchanged (57% of the section changed)

is a leading provider of financial, insurance and advisory services tailored to help our clients and their businesses grow and succeed.

As a trusted advisor to small and midsized businesses (“SMB”) across the United States, our comprehensive approach enables CBIZ to address our clients’ most urgent needs and complex challenges.

As a trusted advisor to businesses of varying size in numerous industries across the United States, our comprehensive approach enables our clients to achieve their most important goals and pursue opportunities for growth while navigating an increasingly complex business environment.

With more than 100 offices in 31 states and the District of Columbia, we are one of the largest accounting, insurance brokerage and related financial services providers in the nation.

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Business Strategy

Since our founding in 1996, we have built our business through investment in high-growth industries and service lines and the strategic acquisition of financial and insurance services providers, specialty businesses and advisory firms.

At CBIZ, our mission is to provide exceptional advice and solutions that help our clients achieve their goals.

We strive to be our clients’ preferred partner for their financial, insurance and advisory needs.

We achieve this by offering a higher level of individualized service for SMB clients than what is typically delivered by traditional national firms.

We are embedded in local and regional markets and build meaningful relationships to foster deeper understanding of our clients’ business and industry.

Our localized resources are supported by a robust national network of subject matter experts and specialty services that respond to our clients’ evolving needs.

Since our founding in 1996, CBIZ's vision was to provide our clients with a breadth of services and depth of expertise that is unmatched in our industries.

CBIZ pursued this vision by acquiring the most highly regarded, best in class financial, insurance, and advisory firms that demonstrated a shared commitment to exceptional client service and strong cultural fit.

We also continue to make strategic investment to support organic growth including the attraction, retention and development of high-performing producers and the implementation of systems and tools that respond to our clients' needs.

At CBIZ, we strive to be our clients’ preferred partner for their financial, insurance and advisory needs.

While many of our competitors tend to be mono-line in their offerings, we offer multi-disciplinary, holistic solutions that are comprehensive and provide higher value to our clients while eliminating the need for coordination between multiple service providers.

We are also embedded in local and regional markets and build meaningful relationships to foster deeper understanding of our clients’ business and industry.

We believe this approach enables CBIZ to “out local the nationals, and out national the locals” that ultimately creates a differentiated experience for the clients we serve.

Our custom integrated solutions are designed to be comprehensive and eliminate the need for coordination of multiple service providers.

We also leverage technology to create efficiencies and to link aligned services such as benefits, payroll and human capital management services.

Our strength is helping our clients to focus on their own core competencies and manage risk through the efficient coordination and delivery of essential professional services.

Available Information - Our principal executive office is located at 6050 Oak Tree Boulevard, South, Suite 500, Cleveland, Ohio 44131, and our telephone number is (216) 447-9000.

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A general description of the services provided by each practice group is presented in the table below.

Financial Services

Benefits and Insurance Services

National Practices

• Accounting and Tax

• Government Healthcare Consulting

• Financial Advisory

Financial Services Benefits and Insurance Services National Practices

Accounting and Tax Group Health Benefits Consulting Managed Networking and Hardware Services

Government Healthcare Consulting Payroll Healthcare Consulting

Financial Advisory Property and Casualty

Valuation Retirement Plan Services

Risk & Advisory Services

• Group Health Benefits Consulting

• Property and Casualty

• Retirement Plan Services

• Managed Networking and Hardware Services

• Healthcare Consulting

Financial Services

Financial Services is comprised of core accounting services including traditional accounting, tax compliance and specialty services, including transaction and risk advisory services, litigation support, valuation, federal and state government health care compliance, real estate consulting and internal audit outsourcing nationwide.

Financial Services is comprised of core accounting service including traditional accounting, tax compliance, advisory, and specialty services, like transaction and risk advisory services, litigation support, valuation, and federal and state government health care compliance.

Financial Services reports to the President of Financial Services.

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As such, we maintain joint-referral relationships and administrative service agreements (“ASAs”) with independent licensed Certified Public Accounting (“CPA”) firms (the “CPA firms”) under which audit and attest services may be provided to our clients by such CPA firms.

At December 31, 201 9 , we maintained ASAs with five CPA firms.

Most of the members and/or stockholders of th ose CPA firms are also our employees, and we render services to the CPA firms as an independent contractor.

At December 31, 2020, we maintained ASAs with four CPA firms.

Most of the members and/or stockholders of those CPA firms are also our employees, and we render services to the CPA firms as an independent contractor.

One of our ASAs is with Mayer Hoffman McCann, P.C.

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As such, the CPA firms with which we maintain ASAs qualify as variable interest entities.

The ASAs have terms ranging up to fifteen years, are renewable upon agreement by both parties, and have certain rights of extension and termination.

The ASAs have terms ranging up to nineteen years, are renewable upon agreement by both parties, and have certain rights of extension and termination.

Under these ASAs, we provide a range of services to the CPA firms, including (but not limited to):

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Benefits and Insurance Services

Benefits and Insurance Services provides brokerage and consulting along lines of services which include group health benefits consulting and brokerage, property and casualty brokerage, retirement plan advisory, payroll, human capital management, actuarial, life insurance and other related services.

Benefits and Insurance Services provides brokerage and consulting for group health benefits and property and casualty in addition to retirement plan advisory services, payroll, human capital management, and other related services.

The leader for each service line reports to the President of Benefits and Insurance Services.

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Revenue by practice group for the years ended December 31, 2020, 2019 and 2018 is provided in the table below (in thousands) along with a discussion of certain external relationships and regulatory factors that currently impact those segments.

Year Ended December 31,

Year End December 31,

2020 2019 2018

Financial Services $ 629,778 65.3 % $ 616,567 65.0 % $ 600,926 65.2 %

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Our revenue growth model includes three components;

internal organic growth, cross-serving additional services to our existing clients, and targeted acquisitions.

internal organic growth, cross-serving additional services to our existing clients, and strategic acquisitions.

Each of these components is critical to our long-term growth strategy.

We believe we can capitalize on organic growth opportunities by offering more access to national resources than traditional local professional service firms, but delivering these services locally with a higher level of personal service than is delivered from traditional national firms.

We are also able to leverage technology to create efficiencies and to link aligned services such as benefits, payroll and human capital management services.

• We capitalize on organic growth opportunities by offering our clients a high-touch, tailored service experience that is backed by national resources.

This approach enables our clients to access a breadth and depth of services and expertise typically not available through smaller, regional professional services providers but with a better client experience than what is delivered by many national firms.

Our ability to coordinate services and offer more comprehensive solutions eliminates the need to work with multiple service providers and creates opportunities to increase both value and efficiency.

• Cross-serving provides us with the opportunity to offer and deliver multiple services to our existing clients.

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Being our clients’ preferred partner allows us the opportunity to respond to our clients’ needs with diverse and integrated services and solutions.

Our acquisition strategy is to selectively acquire businesses in high growth service lines and industries that strengthen our existing service offerings, introduce new specialties and expertise to better serve our clients and enter or expand in desirable geographies and growing markets.

We seek target acquisitions with a commitment to exceptional client service, strong leadership and a positive market reputation.

We look for opportunities that expand the potential for cross-serving additional services to our clients, an ability to integrate quickly with our existing operations and are accretive to earnings.

We provide professional services to over 90,000 clients of which more than 50,000 are business clients.

Our clients represent a large variety of industries and markets.

We target primarily SMB companies that have between 50 and 2,000 employees and annual revenues between $5 million and $200 million.

Our largest client comprised less than 2.7% of our consolidated revenue in 2019 and is included in the National Practices group.

Management believes that our client diversity helps insulate us from a downturn in a particular industry or geographic market.

• We seek to acquire businesses that strengthen our existing service offerings, enhance our expertise or introduce new specialties to better serve our clients and enter or expand in desirable geographies and growing markets.

When evaluating acquisition opportunities, we prioritize positive market reputation, shared values and alignment of culture, commitment to exceptional client service, and strong leadership.

In 2020, we completed seven business acquisitions and purchased four client lists.

From time to time, we divest, through sale or closure, business operations that do not contribute to our long-term objectives for growth or are not critical to our service offerings or markets.

For further discussion regarding acquisitions and divestitures, refer to Note 18, Business Combinations and Note 19, Divestitures, to the accompanying consolidated financial statements.

We provide multi-disciplinary and comprehensive solutions and professional services to over 82,000 clients.

Our client base is made up of approximately 48,000 business clients and 34,000 individual clients.

Our business client base is geographically dispersed across the country and represents over 25 different industries.

Our clients include small, middle market, and large businesses and organizations ranging from less than 10 to more than 1,000 employees.

Our largest client comprised approximately 2.7% of our consolidated revenue in 2020 and is included in the National Practices group.

Management believes that the diversity of our client base helps insulate us from a downturn in a particular industry or geographic market.

Nevertheless, economic conditions among select clients and groups of clients may have an impact on the demand for the services that we provide.

Acquisitions and Divestitures

We seek to acquire businesses that strengthen our existing service offerings, introduce new specialties and expertise to better serve our clients and enter or expand in desirable geographies and growing markets.

In 2019, we completed six acquisitions and purchased one client list.

From time to time, we divest (through sale or closure) business operations on an as-needed basis that do not contribute to our long-term objectives for growth, or that are not complementary to our target service offerings and markets.

For further discussion regarding acquisitions and divestitures, refer to Note 18, Acquisitions and Note 19, Discontinued Operations and Divestitures, to the accompanying consolidated financial statement

Our operations are subject to regulation by federal, state, local and professional governing bodies.

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We remain abreast of regulatory changes affecting our business, as these changes often affect clients’ activities with respect to employment, taxation, benefits, and accounting.

For instance, changes in income, estate, or property tax laws may require additional consultation with clients subject to these changes to assist these clients to comply with revised regulations.

For instance, changes in income, estate,

or property tax laws may require additional consultation with clients subject to these changes to assist these clients to comply with revised regulations.

We are subject to industry regulation and changes, including changes in laws, regulations, and codes of ethics governing our accounting, insurance, valuation, registered investment advisory and broker-dealer operations, as well as in other industries, the interpretation of which may impact our operations.

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Seasonality is most evident in the quarterly earnings per share (EPS) as most of the annual EPS is earned during the first half of the year.

Like most professional service companies, most of our operating costs are relatively fixed in the short term, which generally results in higher operating margins in the first half of the year.

Like most professional service companies, a large portion of our operating costs are relatively fixed in the short term, which generally results in higher operating margins in the first half of the year.

The professional business services industry is highly fragmented and competitive.

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We believe that our strong client relationships, high quality of professional services, range of service offerings, industry expertise, geographic proximity, as well as our ability to provide national expertise on a local level give us a competitive advantage.

We employed approximately 4,800 employees as of December 31, 2019.

A large number of our employees hold professional licenses or credentials required of their respective profession.

As a leading provider of professional services, our success depends on our ability to recruit, retain, engage, and develop a talented workforce.

We believe that our employees are our most important asset and strive to be recognized as employer of choice by our employees.

Human Capital

At CBIZ, our value proposition to our clients is the breadth and depth of our services including our unique ability to provide multi-disciplinary, coordinated solutions that respond to the complexity and uncertainty of today’s business environment.

CBIZ brings value because of the talent, expertise and commitment of approximately 4,800 professionals that make up our team nationwide.

Throughout 2020 in our ongoing response to the COVID-19 pandemic, we prioritized the health and safety of our team members and clients.

Our efforts included the implementation of a multitude of health and safety measures to protect our work environments, a data-driven approach to remote work and rigorous protocols for ongoing reporting and contact tracing.

Our ability to maintain operations with minimal disruption to our clients over the last year is a direct reflection of the determination, resilience and commitment of our team.

We are diligent in our efforts to attract, retain and develop talent and all recruitment is managed through a national team of experts based on a process that consistently and fairly utilizes best practices and various recruiting tools to source top talent.

CBIZ recruiters build relationships through personal connections, and are full life-cycle recruiters who stay with their candidates from first contact through their first 60 days as a CBIZ associate.

These professionals are focused on building outreach networks with community agencies, websites and social media networks, as well as schools, universities and institutions with a special emphasis on those entities that attract a diverse population.

CBIZ is an equal opportunity employer and does not discriminate in hiring or employment in accordance with the requirements of all applicable state and federal laws, including race, religion, national origin, ancestry, age, gender identity, marital status, military status, sexual orientation, disability, or medical condition.

The CBIZ Human Rights Policy demonstrates our commitment to respecting human rights throughout CBIZ.

We believe the protection of human rights is fundamental to conducting great business, and believe we have both the ability and responsibility to drive positive change through our culture and business practices.

CBIZ is proud of its efforts to be a learning organization that provides opportunities for education, technical training, professional development, leadership development, and coaching and awareness at every step in an associate’s career.

These opportunities are offered in both in-person and on-demand virtual programs.

Most recently, CBIZ expanded and enhanced our diversity and inclusion training and education for all associates and continues to introduce additional resources as we accelerate our own efforts in this area.

At CBIZ, our values-based culture is central in our approach to employee experience and engagement.

We measure employee engagement on an ongoing basis to gather feedback and identify opportunities to strengthen our culture and improve our work environments.

CBIZ continues to be recognized for our intentional efforts to enhance employee engagement and to position CBIZ as our team’s employer of choice.

In 2020, CBIZ was awarded 68 workplace awards including seven national awards and four national health and wellness awards.

A sample of the awards won include:

• Best Workplace in Consulting and Professional Services - We were named one of the “2020 Best Workplaces in Consulting and Professional Services” by Great Place to Work.

• Alliance for Workplace Excellence - We were recognized for three awards in 2020 by the Alliance for Workplace Excellence;

(i) Workplace Excellence Seal of Approval, (ii) Health & Wellness Seal of Approval and (iii) Certificate of Recognition – Best Practices for Supporting Works 50+.

• Best Places to Work - We were selected and honored for the sixth consecutive year as a “Best Places to Work in Insurance” by Business Insurance magazine based on our commitment to attracting, developing and retaining great talent through employee benefits and other programs.

We were recognized for this award based on core focus areas such as leadership and planning, corporate culture, communications, work environment and overall engagement.

• 2020 Healthiest 100 Workplaces in America – Springbuk evaluated over 1,000 applicants across six key categories:

Culture and Leadership Commitment, Foundational Components, Strategic Planning, Marketing and Communications, Programming and Interventions, and Reporting and Analytics.

We were honored to be named one of the top 100 winners for the third time.

• 2020 Best and Brightest Companies in the Nation Top 101 - For the fifth year in a row, we were honored as a “Best and Brightest Company” by National Association of Business Resources ("NABR") based on our commitment to human resource practices and employee enrichment.

• 2020 Best and Brightness in Wellness – We were honored by NABR, for the fourth consecutive time, as an organization that promotes a culture of wellness.

At CBIZ, we believe Diversity and Inclusion is a business imperative and we are working together toward making it an essential and valued part of our culture.

We strive to create an environment that welcomes, values, respects, leverages and develops our individual differences and similarities and this commitment includes identifying and actively combating racism and discrimination in any form.

In 2020, CBIZ renewed our commitment to improving diversity and inclusion across the company and in the industries and communities where we work.

We are in the process of accelerating our efforts with a focus on actionable steps in the short-term to engage our team members and build momentum.

These short-term actions combined with CBIZ’s existing efforts and assets will form the foundation of a more comprehensive and long-term diversity and inclusion strategy.

In the last year, CBIZ joined CEO Action for Diversity and Inclusion, the largest CEO-driven business commitment to advance diversity and inclusion within the workplace.

Jerry Grisko signed onto to the CEO Action Pledge and joined leaders from more than 1,000 of the world’s most well recognized companies and organizations representing over 85 industries.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business