Sterling Check Corp. acquired by First Advantage for $2.2B in cash and stock

Atlanta-headquartered First Advantage Corporation, which provides employment background screening, is acquiring biometric identity verification firm Sterling Check Corp. for a combination of $1.2 billion in cash and 27.15 million shares of First Advantage stock, for a total value of approximately $2.2 billion, according to a news release.

First Advantage entered into a definitive purchase agreement to acquire the Portland-based digital identity provider, which includes covering Sterling’s outstanding debt. The goal is to merge the two companies’ complementary technologies to offer customers accelerated investment in innovation and access to a broader suite of products, thereby fueling growth across the healthcare, retail and e-commerce, transportation, manufacturing and financial services sectors.

“We are excited to be combining with First Advantage to accelerate Sterling’s strategic goals and deliver added value for our company, shareholders, clients, and employees,” says Josh Peirez, CEO of Sterling. “Importantly, this transaction delivers immediate value to Sterling shareholders, as well as the opportunity to participate in the compelling, long-term upside potential of a combined company that is positioned better than ever to serve the dynamic needs of our customers.”

Scott Staples, CEO of First Advantage, says the acquisition improves the company’s resilience, and unlocks opportunities to push growth through investment in digital identity and automated AI-driven technologies.

Per the release, “entities advised by or affiliated with Goldman Sachs & Co. LLC.,” which own more than half of Sterling’s outstanding shares, approved the transaction. Adrian Jones, global chairman and co-head of private equity within Goldman Sachs Asset Management, praised Peirez’s leadership, calling him “an outstanding leader and partner, growing the business, and successfully bringing the company to the public markets.”

Once the transaction closes – expected to happen in Q3 of 2024 – Peirez will be offered a seat on the First Advantage Board of Directors.

Under the terms of the agreement, Sterling shareholders will elect to receive either $16.73 in cash or 0.979 shares of First Advantage common stock for each Sterling share. Sterling shareholders are expected to own approximately 16 percent of the combined company after closing. First Advantage has secured financing from Bank of America, N.A., Barclays Bank PLC, Bank of Montreal, Jefferies Finance LLC and Royal Bank of Canada.

The deal is expected to diversify and grow revenue streams across industries and territories, drive total shareholder return outlook, deliver at least $50 million in run-rate synergies, and improve operational efficiency.

The joint in-person biometric identity verification platform offered by Sterling Check and ID.me was certified to Identity Assurance Level 2 by Kantara last year.

Article Topics

acquisitions  |  background checks  |  biometrics  |  identity assurance  |  identity verification  |  Sterling Check