First Advantage (FA) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Macroeconomic factors beyond our control, including the state of the economy, could impact demand and the fulfillment costs for our products and solutions
2. 02We operate in a highly regulated industry and are subject to numerous and evolving laws and regulations
3. 03Continued scrutiny of collection, use, and processing of personal data and data security could lead to increased restrictions, loss of revenue opportunity, greater costs of compliance, and lost efficiency
4. 04We may not be able to identify and successfully implement our growth strategies on a timely basis or at all
5. 05Social, ethical, and legal issues 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. 06Any damage to our reputation or our brand could adversely affect our business, financial condition, and results of operations
7. 07To the extent our customers reduce their operations, downsize their screening programs, or otherwise demand fewer of our products and solutions, our business could be adversely impacted
8. 08We operate in a penetrated and competitive market
9. 09We rely on third-party data and service providers. If they are unable to deliver or perform as expected, our ability to operate effectively may be impaired, and our business may be materially and adversely affected
10. 10federal, state, and local laws and regulations regarding procurement integrity, including gratuity, bribery and anti-corruption requirements as well as limitations on political contributions and lobbying
11. 11Due to the sensitive and privacy-driven nature of our products and solutions, we could face liability and legal or regulatory proceedings, which could be costly and time-consuming to defend and may not be fully covered by insurance
12. 12Our products entail the collection, use, processing, disclosure, storage, and transmission of personal information, confidential information, and other sensitive and/or regulated information of individuals, including personal data
13. 13Our international business exposes us to a number of risks
14. 14Real or perceived errors, failures, or bugs in our products could adversely affect our business, results of operations, financial condition, and growth prospects
15. 15Failure to realize the expected benefits of our acquisition of Sterling could adversely affect our business and the value of our common stock
16. 16integrating employees and related human resource systems and benefits, maintaining employee morale and retaining key employees
17. 17We may not be able to identify attractive acquisition targets and strategic partnerships or successfully complete such transactions
18. 18Failure to comply with anti-corruption, economic and trade sanctions, and anti-money laundering laws and regulations could have an adverse effect on our business
19. 19Disruptions at our Global Operating Center and other operational sites could adversely impact our business
20. 20We are not guaranteed exclusivity or volumes in all of our contracts with our customers and our customers may experience major business changes that impact our current or future revenue streams
21. 21Disruptions with our technology and network infrastructure, including our data centers, servers, and third-party cloud and internet providers, and our migration to the cloud, could have an adverse impact on our business
22. 22If we fail to continue to integrate our platforms and solutions with that of human resource software providers or if our relationships with human resource software providers deteriorate, our business could be adversely affected
23. 23We are subject to risks relating to public opinion, which may be magnified by incidents or adverse publicity concerning our industry or operations
24. 24We rely on third-party vendors to carry out certain portions of our operations. If they cannot deliver or perform as expected or if our relationships with them are terminated or otherwise change, our business operations and results of operations could be materially and adversely affected
25. 25In addition, any shift in business strategy, corporate reorganization, or financial difficulties, such as bankruptcy faced by our third-party providers, may have negative effects on our ability to implement our business strategy
26. 26Our continued success depends in large part on the service of our key executives and our ability to find and retain qualified employees
27. 27If we are unable to maintain, protect and enforce the confidentiality of our trade secrets, our business and competitive position would be harmed
28. 28The use of open-source software in our applications may expose us to additional risks and harm our intellectual property rights
29. 29Seasonality may cause our operating results to fluctuate from quarter to quarter
30. 30In addition, customers may elect to complete post-onboarding screening such as workforce re-screens and other products at different periods and intervals during any given year. It is not always possible to accurately forecast the timing and magnitude of these programs
31. 31Our implementation cycles can be lengthy and variable, depend upon factors outside our control, and could cause us unexpected delays in generating revenues or result in lower than anticipated revenues
32. 32The interpretation of tax laws may have a material adverse effect on our business
33. 33Climate change may have a long-term impact on our business

Risks Related to Our Indebtedness

1. 34Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially adversely affect our business, results of operations, and financial condition
2. 35We have a significant amount of indebtedness. As of December 31, 2024, we had $2,185.0 million of total debt outstanding
3. 36limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy, or other general corporate purposes
4. 37adversely affect our ability to raise additional debt
5. 38We will require a significant amount of cash to service our debt, and our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could materially adversely affect our business, results of operations, and financial condition
6. 39Our debt instruments restrict our current and future operations, particularly our ability to respond to changes or take certain actions
7. 40engage in certain fundamental changes, including changes in the nature of our business

Risks Related to Ownership of Our Common Stock

1. 41Silver Lake controls us and its interests may conflict with yours in the future
2. 42Our stock price may be highly volatile or may decline regardless of our operating performance, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result
3. 43other events or factors, including those resulting from informational technology system failures and disruptions, natural disasters, war, acts of terrorism or responses to these events
4. 44We do not intend to pay dividends for the foreseeable future
5. 45First Advantage Corporation is a holding company with no operations of its own and, as such, it depends on its subsidiaries for cash to fund all of its operations and expenses, including future dividend payments, if any
6. 46We qualify as a “controlled company” within the meaning of Nasdaq rules and the rules of the SEC and, as a result, qualify for exemptions from certain corporate governance requirements
7. 47the compensation of our executive officers be determined, or recommended to our Board of Directors for determination, by a compensation committee comprised solely of independent directors
8. 48You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise
9. 49Future sales, or the perception of future sales, of our common stock, by us or our existing stockholders in the public market could cause the market price for our common stock to decline
10. 50Anti-takeover provisions in our organizational documents could delay or prevent a change of control
11. 51Our Board of Directors is authorized to issue and designate shares of our preferred stock in additional series without stockholder approval