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Acquisitions | 12 Months Ended
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Dec. 31, 2024
Business Combinations [Abstract] |
Acquisitions | Note 3. Acquisitions 2024 Acquisition On February 28, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among First Advantage, Sterling Check Corp., a Delaware corporation, and Starter Merger Sub, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of First Advantage (the “Merger Sub”). On October 31, 2024, following the satisfaction or waiver of the applicable closing conditions, including receipt of the requisite regulatory approvals, First Advantage completed its acquisition of Sterling, pursuant to the Merger Agreement (the “Acquisition”). Under the terms of the Merger Agreement, Merger Sub merged with and into Sterling, with Sterling continuing as the surviving corporation in such merger and becoming an indirect, wholly owned subsidiary of First Advantage. The cash-and-stock transaction valued Sterling at approximately $2.2 billion and was financed through cash on hand and the issuance of new debt and common stock as described in Note 7, “Debt”. Each share of Sterling common stock issued and outstanding, subject to limitations, was converted into the right to receive, at the holder's election and subject to proration, $16.73 in cash per share (the "Cash Consideration"), 0.979 shares of First Advantage common stock (the "Stock Consideration"), or a combination thereof (the “Merger Consideration”). No fractional shares of First Advantage Common Stock were issued. Sterling holders of restricted stock, restricted stock units, and net option shares (as calculated pursuant to the Merger Agreement) underlying in-the-money stock option awards of Sterling received the same election to receive the per-share Merger Consideration. Merger Consideration for unvested awards (other than unvested awards held by non-employee directors) was paid in the form of either an unvested cash award, an unvested First Advantage restricted stock award, or a First Advantage restricted stock unit at the holder’s election. First Advantage awards are subject to the same terms and conditions (including vesting) as applied to the replaced Sterling award. Any out-of-the-money Sterling stock options, whether vested or unvested, were canceled for no consideration. The Sterling stockholders received consideration of approximately $1,168.1 million in cash and 27.15 million shares of First Advantage common stock with a fair value of $494.6 million. Sterling was determined to constitute a business and the Company was deemed to be the acquirer under ASC 805. As a result, the Company has recorded the related purchase accounting as of October 31, 2024.The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands):
Consideration |  |  |
Cash consideration |  | $ | 1,152,163 |
Plus: fair value of assumed Sterling equity awards to receive cash attributable to pre-combination service |  |  | 15,905 |
Plus: repayment of Sterling's outstanding debt |  |  | 535,046 |
Plus: fair value of First Advantage common stock issued |  |  | 490,098 |
Plus: fair value of assumed Sterling equity awards to receive equity awards attributable to pre-combination service |  |  | 4,487 |
Total fair value of consideration transferred |  | $ | 2,197,699 |
Current assets |  | $ | 227,469 |
Property and equipment, including software developed for internal use |  |  | 273,370 |
Intangible assets |  |  | 717,000 |
Deferred tax asset |  |  | 58,100 |
Other assets |  |  | 12,516 |
Current liabilities |  |  | (149,818 | )
Deferred tax liability |  |  | (238,077 | )
Other liabilities |  |  | (16,226 | )
Total identifiable net assets |  | $ | 884,334 |
Goodwill |  | $ | 1,313,365 |
The fair values and useful lives of the acquired intangible assets by category were as follows (in thousands):
|  | Balance Sheet Location |  | Estimated Fair Values |  |  | Useful Life (in years)
Customer lists |  | Intangible assets, net |  | $ | 655,000 |  |  | 14 years
Software developed for internal use |  | Property and equipment, net |  |  | 259,000 |  |  | 5 years
Trade names |  | Intangible assets, net |  |  | 62,000 |  |  | 5 years
Goodwill recognized is not expected to be deductible for tax purposes. Costs incurred by the Company related to the Acquisition were primarily composed of deferred financing costs associated with the new financing structure which have been capitalized within current and long-term debt in the accompanying consolidated balance sheets (see Note 7. “Debt”) and approximately $68.1 million of transaction costs, primarily consisting of change in control-related costs, professional service fees, and other third-party costs. Additionally, for the year ended December 31, 2024, the Company recognized $41.2 million in compensation expense related to converted cash awards for post-combination services in the accompanying consolidated statements of operations and comprehensive (loss) income, of which $5.6 million remained unpaid and was included in accrued compensation in the accompanying consolidated balance sheet as of December 31, 2024. The Company recognized $4.4 million in share-based compensation expense related to converted equity awards for post-combination services in the accompanying consolidated statements of operations and comprehensive (loss) income. See Note 11. “Share-based Compensation” for further discussion. Results of operations include revenues of $113.1 million and a net loss of $57.4 million related to the Company’s Sterling segment since the date of acquisition. The transaction extends First Advantage’s high-quality and cost-effective background screening, identity, and verification technology solutions for the benefit of both companies' customers across industry verticals and geographies. As of the date these consolidated financial statements were issued, the purchase accounting related to this acquisition was incomplete as the valuation of certain working capital balances, deferred taxes, and certain customary transaction adjustments were not yet finalized. The Company has reflected the provisional amounts in these consolidated financial statements. As such, the above balances may be adjusted in a future period as the valuation is finalized and these adjustments may be material to the consolidated financial statements. Pro Forma Results The following summary, prepared on a pro forma basis pursuant to ASC 805, presents the Company’s consolidated results of operations for the year ended December 31, 2024 and 2023, as if the Acquisition had been completed on January 1, 2023. The pro forma results below include the impact of certain adjustments related to the amortization of intangible assets, transaction-related costs incurred as of the acquisition date, and interest expense on related borrowings, and in each case, the related income tax effects, as well as certain other post-acquisition adjustments attributable to the Acquisition. This pro forma presentation does not include any impact of transaction synergies. The pro forma results are not necessarily indicative of the results of operations that actually would have been achieved had the Acquisition been consummated as of January 1, 2023.
|  | Year Ended December 31, |
(in thousands, unaudited) |  | 2024 |  |  | 2023 |
Revenue |  | $ | 1,509,560 |  |  | $ | 1,482,850 |
Net loss |  | $ | (138,158 | ) |  | $ | (193,293 | )
2023 Acquisition On September 1, 2023, the Company acquired 100% of the equity interest of a digital identity and biometrics solutions company headquartered in New York, for $41.0 million. The acquired company operates under the trade name Infinite ID. The acquisition expanded the Company’s network and portfolio of identity solutions in the United States. The Company determined that the acquired company constitutes a business and the Company was deemed to be the acquirer under ASC 805. The Company recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of September 1, 2023. The allocation was finalized as of June 30, 2024 with an immaterial adjustment recorded related to the valuation of deferred taxes. The allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed (in thousands):
Consideration |  |  |
Cash purchase price |  | $ | 41,000 |
Other transaction adjustments |  |  | 97 |
Total fair value of consideration transferred |  | $ | 41,097 |
Current assets |  | $ | 1,335 |
Property and equipment, including software developed for internal use |  |  | 5,959 |
Trade name |  |  | 2,300 |
Customer lists |  |  | 3,800 |
Other intangible assets |  |  | 2,400 |
Other assets |  |  | 236 |
Total liabilities |  |  | (1,084 | )
Total identifiable net assets |  | $ | 14,946 |
Goodwill |  | $ | 26,151 |
Goodwill recognized is not deductible for tax purposes. Results of operations have been included in the consolidated financial statements of the Company’s First Advantage Americas segment since the date of acquisition. 2022 Acquisition On January 1, 2022, the Company completed its asset purchase of Form I-9 Compliance, a U.S.-based technology solution and consulting service provider for I-9 and E-Verify compliance, for cash consideration of approximately $19.8 million. The Company recognized $9.1 million of goodwill. Identifiable intangible assets related to this acquisition totaled $8.5 million, of which $6.1 million was attributable to a customer related intangible asset with an estimated useful life of thirteen years and $2.4 million was attributable to developed technology with a useful life of five years. Goodwill recognized is deductible for tax purposes. Results of operations have been included in the consolidated financial statements of the Company’s First Advantage Americas segment since the date of the acquisition.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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