Sterling Check Corp Acquires Socrates Ltd

Sterling is a Nasdaq-listed company that provides identity and background checks to more than 50,000 clients across all sectors, allowing companies to improve their work environments as well as their relationships with partnerships and users. Sterling performed more than 95 million identity verification searches in 2021.

Since its founding in Brazil in 2003, Socrates has expanded its operations to Colombia and Mexico. Among its offering, the firm provides its clients with services for criminal and background checks, credit record checks and employment and education qualification checks. Sterling has acquired the firm as part of a move to expand its services throughout Latin America and improve its offering to its regional clients.

Robert Jones, CEO of Socrates, celebrated the move in a statement. “We are very pleased to join Sterling and are proud of this next chapter for our company. We look forward to combining our regional experience in Latin America with Sterling’s best-in-class customer service model,” he said.

Lawyer Monthly had the pleasure to speak with Alejandro Salas de la Borbolla at DEFOREST Abogados to give us some further insight into this transaction:

Please tell us more about the transaction and the role that DEFOREST Abogados played within it.

DEFOREST was a key player in the purchase and sale transaction. Thanks to its experience in the field, it managed to work with more than six international firms in different countries to properly review and organise the financial and corporate legal information of the acquired companies. DEFOREST recommended this transaction since acquiring a company can provide several advantages:

1. Increased market share and customer base. Acquiring a company can help you expand your reach and acquire new customers, which can translate into increased profits;
2. Access to new products or technology. By acquiring another company, you can gain access to new products, technology and expertise that you may not have otherwise;
3. Increased efficiency. Acquiring a company can help you improve your operational efficiency, reduce costs and streamline your business processes;
4. Competitive advantage. Acquiring a company can help you gain a competitive advantage over your rivals by strengthening your position in the market;
5. Talent acquisition. You may acquire talented employees who can help you achieve your business goals, and potentially fill any skill gaps you have in your organisation.

What specialised skills and experience did your team bring to the work?

The timely and thorough review of the corporate legal documentation was essential to have in order and properly classified the information to be delivered to the client.

How did you work with the other firms and legal counsel involved to ensure the operation’s success?

There were several advantages to working with other firms as a ’legal team‘ in this transaction. Here are a few:

1. Expertise. A legal team typically has a wide range of expertise in various fields of law. This can help you get a detailed and comprehensive understanding of your legal situation;
2. Efficiency. A legal team can work more efficiently to handle your case since there are multiple people working on it. They can split the workload and get things done more quickly;
3. Resources. A legal team typically has access to a wide range of resources that can help with your case, including technology, research databases and other professionals who can provide expert opinions;
4. Support. Working with a legal team can provide you with more emotional and moral support during what can often be a stressful and uncertain time;
5. Strategy. A legal team can help you formulate and execute a legal strategy that takes into account your personal goals and objectives, as well as the legal issues at play.

The timely and thorough review of the corporate legal documentation was essential to have in order and properly classified the information to be delivered to the client.

Were any significant challenges encountered during the course of your work? If so, how did you overcome them?

There were several challenges during the acquisition of the company, such as:

1. Valuation. Determining the value of the company being acquired can be complex and often requires the expertise of investment bankers and financial advisors;
2. Integration. There may be cultural differences and logistical challenges in integrating the acquired company into the existing organisation, including blending of systems, processes and people;
3. Human resources. Successfully managing the workforce, managing layoffs (if any) and determining employee benefits can be a daunting task;
4. Legal issues. Potential legal issues can arise such as analysing contracts, litigation and labour relations, which may induce delays or veto the M&A process;
5. Regulatory considerations. Acquisitions may require regulatory approval, and meeting regulatory requirements can be a formidable challenge, particularly in industries that are heavily regulated, such as healthcare or financial services.

These are just some of the many challenges faced during an acquisition. It is worth remembering that proper preparation and planning can mitigate the risks and uncertainties associated with any merger or acquisition.

Would you say that your work on the acquisition was representative of the character of DeForest Abogados?

Yes, since the motto of our firm defines us: We work with passion.

What impact do you expect this merger will have on verification services in Latin America?

Sterling Check will give a lot of benefits to their customers in Latin America. Some examples are:

1. Increased security. Verification services will help Latin American companies to better ensure that the people or entities they are dealing with are legitimate and trustworthy;
2. Improved accuracy. By using advanced technology and algorithms, verification services can provide more accurate information than manual verification processes;
3. Streamlined processes. Online verification services will help to automate and streamline many administrative procedures, saving time and reducing costs;
4. Compliance. Many industries are subject to regulatory requirements and compliance obligations. Verification services will help Latin American companies to meet these obligations more easily;
5. Customer trust. By providing a secure and trustworthy platform, verification services can help to build trust with customers and create a better user experience.