On October 31, 2024, the Company completed the acquisition of Sterling Check Corp. (“Sterling” and such acquisition, the “Sterling Acquisition”), a leading provider of background screening and identity verification services. 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 6, “Debt”. The acquisition extended 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.

Sterling was determined to constitute 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 October 31, 2024. During the three months ended March 31, 2025, the Company recorded a $0.2 million adjustment related to the valuation of certain tax liabilities.

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		(150,026	)
Deferred tax liability		(238,077	)
Other liabilities		(16,226	)
Total identifiable net assets	$	884,126
Goodwill	$	1,313,573

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. Results of operations have been included in the condensed consolidated financial statements of the Company’s Sterling segment since the date of acquisition.

As of the date these condensed consolidated financial statements were issued, the purchase accounting related to this acquisition was incomplete as the valuation of 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.

The following summary, prepared on a pro forma basis pursuant to ASC 805, presents the Company’s consolidated results of operations for the three months ended March 31, 2024, as if the Sterling 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 Sterling 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 Sterling Acquisition been consummated as of January 1, 2023.