Alight (ALIT) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01An overall decline in economic activity could adversely affect the financial condition and results of operations of our business
2. 02We face significant competition and our failure to compete successfully could have a material adverse effect on the financial condition and results of operations of our business76% rewritten
3. 03If we are unable to successfully execute the next phase of our strategic transformation, including our ability to effectively and appropriately separate the Divested Business, we may experience operational disruptions, which could negatively affect our business, financial condition and results of operations28% rewritten
4. 04Our business performance and growth plans could be negatively affected if we are not able to effectively apply technology in driving value for our clients or gaining internal efficiencies, or if investments in innovative product offerings fail to yield sufficient return to cover their costs69% rewritten
5. 05Issues relating to the use of new and evolving technologies, such as Artificial Intelligence and Machine Learning, in our offerings may result in reputational harm and liability
6. 06We may not achieve our financial projections, which could have an adverse effect on our business, operating results, and financial conditionNew
7. 07Improper access to, misappropriation, destruction or disclosure of confidential, personal or proprietary data as a result of employee or vendor malfeasance or cyber-attacks could result in financial loss, regulatory scrutiny, legal liability or harm to our reputation
8. 08sales and operating results and require us to incur significant expense to address and remediate or otherwise resolve such issues
9. 09Our business or stock price could be negatively affected as a result of actions of activist stockholders
10. 10We rely on assumptions and estimates to calculate certain of our reported measures, and real or perceived inaccuracies in such measures may harm our reputation and negatively affect our business
11. 11Compliance with laws and regulations applicable to us or to the HR benefits that we administer for our clients including changes in such laws and regulations, their application and their interpretation, could have an adverse effect on our business
12. 12We are subject to professional liability claims against us as well as other contingencies and legal proceedings relating to our delivery of services, some of which, if determined unfavorably to us, could have an adverse effect on our financial condition or results of operations
13. 13We may become involved in claims, litigation or other proceedings that could harm the value of our business
14. 14Our failure to protect our intellectual property rights, or allegations that we have infringed on the intellectual property rights of others, could harm our reputation, ability to compete effectively and financial condition
15. 15We might not be successful at acquiring, investing in or integrating businesses, entering into joint ventures or divesting businesses
16. 16Our growth depends in part on the success of our strategic partnerships with third parties
17. 17Our business is dependent on continued interest in outsourcing
18. 18Our success depends on our ability to retain and attract experienced and qualified personnel, including our senior management team and other professional personnel
19. 19Our inability to successfully recover should we experience a catastrophic event, disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability
20. 20If our clients are not satisfied with our services, we may face additional cost, loss of profit opportunities and damage to our reputation or legal liability
21. 21Damage to our reputation could have a material adverse effect on our business
22. 22We depend on licenses of third-party software to provide our services. The inability to maintain these licenses or errors in the software we license could result in increased costs, or reduced service levels, which would adversely affect our business
23. 23We rely on third parties to perform key functions of our business operations and to provide services to our clients. These third parties may act in ways that could harm our business
24. 24Our business is exposed to risks associated with the handling of client funds
25. 25Our global operations expose us to various international risks that could adversely affect our business
26. 26Our global delivery capability is concentrated in certain key operational centers, which may expose us to operational risks
27. 27The profitability of our engagements with clients may not meet our expectations due to unexpected costs, cost overruns, early contract terminations, unrealized assumptions used in our contract bidding process or the inability to maintain our prices in light of any inflationary and competitive circumstances
28. 28We might not be able to achieve the cost savings required to sustain and increase our profit margins
29. 29We cannot guarantee that our previously announced restructuring program will achieve its intended result67% rewritten
30. 30Changes in accounting principles or in our accounting estimates and assumptions could negatively affect our financial position and results of operations
31. 31We may be required to record goodwill or other long-lived asset impairment charges, which could result in a significant charge to earnings46% rewritten
32. 32Our work with government clients exposes us to additional risks inherent in the government contracting environment
33. 33We are subject to taxation related risks in multiple jurisdictions27% rewritten

Risks Related to Ownership of our Securities

1. 34The Sponsor Investors have significant influence over the Company and their interests may conflict with the Company’s or its stockholders in the future
2. 35Our Charter and Bylaws, and applicable law and regulations, as well as the Investor Rights Agreement, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A Common Stock
3. 36If securities or industry analysts downgrade their recommendations regarding our Class A Common Stock, the price of our Class A Common Stock and trading volume could decline
4. 37The market price of shares of our Class A Common Stock has been, and may continue to be volatile and may decline regardless of our operating performance, which could cause the value of your investment to decline
5. 38The Company’s decision to maintain, reduce or discontinue paying cash dividends to our stockholders or repurchasing our Class A Common Stock could cause the market price for our Class A Common Stock to decline30% rewritten
6. 39There can be no assurance that we will be able to comply with the continued listing standards of NYSE for our Class A Common StockNew

Risks Related to our Organizational Structure

1. 40The Company is a holding company, and our only material asset is our direct and indirect interests in Alight Holdings, and we are accordingly dependent upon distributions from Alight Holdings to pay dividends, taxes and other expenses, including payments under the Tax Receivable Agreement44% rewritten
2. 41tax basis acquired in the Business Combination, the Company’s increase in its allocable share of existing tax basis and anticipated tax basis adjustments we receive in connection with sales or exchanges of Alight Holdings Units after the Business CombinationNew
3. 42In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits the Company realizes in respect of the tax attributes subject to the Tax Receivable Agreement45% rewritten
4. 43to terminate the Tax Receivable Agreement, payments under the Tax Receivable Agreement could be in excess of 85% of the Company’s actual cash tax benefitsNew
5. 44The acceleration of payments under the Tax Receivable Agreement in the case of certain changes of control may impair our ability to consummate change of control transactions or negatively impact the value of our Class A Common Stock

Risks Related to Our Indebtedness

1. 45Refinancing our debt may include terms less favorable to usNew
2. 46Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly
3. 47Changes in our credit ratings could adversely impact our operations and lower our profitability