First Advantage Corporation acquires Sterling Check Corp. (2024)

Deal facts

Buyer: First Advantage Corporation
Target: Sterling Check Corp.
Deal value: Not disclosed
Announced: 28 February 2024
Status: Completed
Sector: Other
Country: United States
Consideration: cash, shares

Sources

SEC_EDGAR_8K

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Deal timeline

1 update

31 Oct 2024CompletedClosed
First Advantage Corporation completes acquisition of Sterling Check Corp.
Introductory Note As previously announced, on February 28, 2024, Sterling Check Corp., a Delaware corporation (the “Company” or “Sterling”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with First Advantage Corporation, a Delaware corporation (“First Advantage”), and Starter Merger Sub, Inc., a Delaware corporation and an indirect, wholly-owned subsidiary of First Advantag
Source

OpinionExit Mode editorial

We see a clear signal in the completed acquisition of Sterling Check Corp by First Advantage Corporation. Announced on 28 February 2024, this transaction is structured as a going-private deal. The buyer and target are both based in the United States, and the consideration involves a mix of cash and shares. While the specific value remains undisclosed, the mechanics of the deal type are significant for any SME founder watching the landscape. A going-private transaction typically removes a public company from the stock exchange, shifting it back into private hands. This often happens when a strategic buyer believes they can operate the business more efficiently without the short-term pressures of public markets.

For the SME founder, this structure presents a distinct set of commercial realities. The use of mixed consideration means shareholders face a blend of immediate liquidity and future exposure to the combined entity. This is not a simple cash exit where the risk ends at closing. The inclusion of shares ties the seller's final return to the performance of the new private group. In the US context, such deals often trigger specific change-of-control covenants and require careful navigation of shareholder approval processes. Unlike a standard trade sale, a going-private move demands rigorous scrutiny of the long-term capital structure and the governance model that will replace public reporting requirements.

We also note the sector classification as Other, which suggests the background check and screening industry continues to consolidate without being constrained by narrow sector-specific definitions. The completion status confirms that regulatory clearance was likely secured, though the specific antitrust thresholds for this cross-border US deal are not detailed in the public record. The absence of a stated value in the announcement is common in private transactions, yet it leaves the market to infer the strategic premium paid for the target's market position. This opacity can make valuation comparisons difficult for founders planning their own exits.

Our view is that founders should not assume a cash-heavy exit is always superior to a mixed deal. The strategic rationale here points to a long-term consolidation play rather than a quick flip. You should this week review your own shareholder agreements to identify any change-of-control covenants that might restrict your ability to negotiate a mixed consideration structure in a future sale. Understanding how these clauses interact with going-private mechanics will give you a stronger hand when the right buyer approaches.

Editorial opinion. Not financial or legal advice.

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