Correspondence 0001140361-24-021076 from HireRight Holdings Corp (CIK 0001859285)
HireRight Holdings Corp (CIK 0001859285)
Date: April 22, 2024 · CIK: 0001859285 · Accession: 0001140361-24-021076
AI Filing Summary & Sentiment
File numbers found in text: 001-40982
Referenced dates: April 10, 2024
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CORRESP
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filename1.htm
John Amorosi
+1 212 450 4010
john.amorosi@davispolk.com
Davis Polk & Wardwell LLP
450 Lexington Avenue New York, NY 10017
davispolk.com
April 22, 2024
Re:
HireRight Holdings Corp
Schedule 13E-3 filed March 21, 2024
File No. 005-93449
Preliminary Proxy Statement filed March 21, 2024
File No. 001-40982
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Mergers & Acquisitions
100 F Street, N.E.
Washington, D.C. 20549
Ladies and Gentlemen:
On behalf of our client, HireRight Holdings Corporation (the “Company”), this letter sets forth the Company’s responses to the comments provided by the staff (the “Staff”) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission relating to the Company’s Proxy Statement on Schedule 14A (the “Proxy Statement”)
and the Schedule 13E-3 (the “Schedule 13E-3”) contained in the Staff’s letter dated April 10, 2024 (the “Comment Letter”). In response to the comments set forth in the
Comment Letter, the Company has revised the Proxy Statement and is filing Amendment No. 1 to the Proxy Statement on Schedule 14A (the “Amended Proxy Statement”) and the Filing Persons (as defined in the
Schedule 13E-3) are filing Amendment No. 1 to the Schedule 13E-3 (the “Amended Schedule 13E-3”), together with this response letter.
For the convenience of the Staff, each comment from the Comment Letter is restated in italics prior to the response to such comment. All references to page numbers and captions (other than those in the Staff’s
comments) correspond to pages and captions in the Amended Proxy Statement and the Amended Schedule 13E-3, as applicable.
Preliminary Proxy Statement and Schedule 13E-3 filed March 21, 2024
Background of the Merger, page 21
1.
Clarify your use of the term “Sponsor” here to refer to other parties interested in acquiring the Company. We assume there is a relationship between the multiple “Sponsors” who made acquisition proposals to
acquire HireRight beginning in 2022 and the “Sponsor Stockholders” who are participants in this going private transaction; however, this should be clarified. To avoid confusion and to clarify the roles of various entities and parties in the
process leading up to the Merger Agreement, revise to specifically identify each “Sponsor” by its actual name throughout. In addition, specifically identify/define each entity that makes up the group “Sponsor Stockholders” as used in the
proxy statement. We note that the initial use of that defined term at the forepart of the proxy statement identifies two entities by name (General Atlantic and Stone Point) but additionally refers to “their affiliated investment funds.”
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure starting on page 21 of the Amended Proxy Statement to remove references to “Sponsor” and instead now refers to
parties interested in discussing a potential strategic transaction involving the Company as “Private Equity Party” or “Strategic Party,” depending on their respective businesses.
The Company has further revised the disclosure to differentiate among the various entities and parties in the process leading up to the Merger Agreement and has included a description of their respective industries and operations. The
Company has not made reference to any relationship between the multiple parties that expressed high-level interest in a transaction with the Company, on the one hand, and the Sponsor Stockholders, on the other hand, because the Sponsor
Stockholders did not have a relationship with any such parties related to the Company.
The Company has not disclosed the actual names of the parties and entities as it believes that the disclosure of the identity of any of the Private Equity Parties or Strategic Party A
could have a negative impact on the Company’s relationship with such parties and other participants in the industry in which the Company operates. Consequently, the Company believes that disclosure of the actual names of the Private Equity
Parties or Strategic Party A could adversely impact the Company’s stockholders. Further, the Company is of the view that the identity of any of the Private Equity Parties or Strategic Party A is not relevant to the determination by the
Unaffiliated Stockholders whether to approve the Merger.
The Company further advises the Staff that it has revised the disclosure in the letter to stockholders and the Notice of Special Meeting of the Amended Proxy Statement in respect of the term “Sponsor Stockholders.” The Company
respectfully refers the Staff to the definitions of Sponsor Stockholders, General Atlantic Stockholders and Stone Point Stockholders on pages vii, v and vii, respectively, of the Amended Proxy Statement, which specifically identify each
affiliated entity of General Atlantic and Stone Point that make up the group “Sponsor Stockholders.”
2.
Refer to your descriptions throughout your filing of the Board meeting held on February 15, 2024 in which the Board determined, among other things, that the Merger was advisable and fair to, and in the best
interests of, HireRight and the Unaffiliated Stockholders. We note the reference on page 35 that that Board meeting took place “with the members of the HireRight Board affiliated with the Sponsor Stockholders and their respective affiliates
not in attendance,” and on page 36 that those in attendance “included a majority of the directors who are not employees of HireRight.” Please clarify for us supplementally which members of the Board attended this meeting. If neither the
members affiliated with the Sponsor Stockholders nor any employee directors attended, please provide your analysis of whether the Board’s resolutions adopted at that meeting are valid under Delaware law and the Company’s governing documents.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 36 and 38 of the Amended Proxy Statement. The Company respectfully notes for the Staff that the Amended Proxy Statement clarifies that
the directors affiliated with the Sponsor Stockholders were not present at the Board meeting held on February 15, 2024, and accordingly, all Board meetings and determinations had a quorum and such Board resolutions adopted at such
meetings are valid under Delaware law and the Company's governing documents.
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3.
See comment 1 above. We note the references on page 22 to “Financial Advisor A” that assisted HireRight in evaluating an acquisition proposal from Sponsor A and additionally participated in contacts with
Sponsors B and C. It appears that information about Financial Advisor A and any “reports” (oral or written) it provided in the context of these evaluations may be required under Item 9 of Schedule 13E-3 and Item 1015 of Regulation M-A. Please
revise or advise.
Response:
The Company respectfully acknowledges the Staff’s comment and respectfully advises the Staff that it has not identified Financial Advisor A by name because it did not provide any analysis or advice with respect to the proposed Rule
13e-3 transaction.
Financial Advisor A was never formally engaged to provide any advice or opinion or view, oral or written, with respect to the structure of the Merger or the fairness of the consideration to be offered to stockholders in the Merger.
Financial Advisor A only provided advice to the HireRight Board in respect of the Private Equity Party A Proposal and did not participate in any contact with Private Equity Parties B or C. Financial Advisor A’s involvement took place prior
to the contemplation by the Company or the HireRight Board of the proposed Rule 13e-3 transaction. As described under the heading “Special Factors—Background of the Merger” on pages 23-24 of the Amended Proxy Statement, the Special
Committee was not formed until November 20, 2023, in light of (i) the possibility of the Sponsor Stockholders submitting a preliminary non-binding proposal for a potential strategic transaction involving the Sponsor Stockholders and
HireRight and (ii) the Sponsor Stockholders’ status as controlling stockholders of HireRight. Following its formation, the Special Committee ultimately determined to engage Centerview as its financial advisor and thereafter relied on
Centerview’s analysis and opinion in connection with its recommendation of the Merger.
Furthermore, Financial Advisor A did not provide any report, opinion or appraisal that is materially related to the Merger, including any report, opinion or appraisal relating to the
consideration or the fairness of the consideration to be offered to the Company’s stockholders or the fairness of the transaction to the Company or to the Company’s stockholders or to the Unaffiliated Stockholders. Additionally, the Company
respectfully advises the Staff that none of the Special Committee, the HireRight Board, Centerview or the Sponsor Stockholders, in their respective evaluations of the Merger, the Merger Consideration and the transactions contemplated by the
Merger Agreement, consulted with nor took into consideration any analysis conducted by Financial Advisor A.
Given the limited nature of the services provided by Financial Advisor A, the fact that Financial Advisor A was never formally engaged and the Special Committee’s subsequent determination to engage Centerview as its financial advisor,
the Company respectfully submits that the requirements of Item 9 of Schedule 13E-3 and Item 1015 of Regulation M-A are not applicable to the services provided by Financial Advisor A.
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Purpose and Reasons of HireRight for the Merger; Recommendation of the HireRight Board and
the Special Committee; Fairness of the Merger, page 35
4.
At the bottom of page 40, expand to describe specifically how the Special Committee considered the factors taken into account by Centerview in issuing its fairness opinion in reaching its own fairness
determination.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 42 of the Amended Proxy Statement.
5.
Refer to the factors listed in the last three bullet points on page 36. Expand to describe how the Board and Special Committee considered each to reach a determination of fairness. For example, what were the
“market, customer and competitive trends” and how were they analyzed?
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 38-39 of the Amended Proxy Statement.
Summary of Centerview Financial Analysis, page 43
6.
We note your statement in the first paragraph of this section that “[t]he summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by,
and underlying the opinion of, Centerview…” Please revise this language (and the subsequent discussion if applicable) to make clear that all material analyses are described. In the same paragraph, we note the disclosure that “Centerview may
have deemed various assumptions more or less probable than other assumptions...” Expand the discussion that follows to identify the assumptions Centerview deemed more or less probable and to explain why.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 45 of the Amended Proxy Statement. The Company respectfully notes for the Staff that the Amended Proxy Statement includes a
clarification on page 45 that the discussion that follows “is a summary of each of the material financial analyses prepared and reviewed with the Special Committee in connection with Centerview’s opinion, dated February 15, 2024.” The
Company respectfully informs the Staff that it has been advised by Centerview that the preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods
of financial analysis and the application of those methods to the particular circumstances. In engaging in that process, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it
considered. As such, it is not possible for Centerview to isolate specific assumptions and evaluate them relative to other assumptions. Further, considering only some aspects of the analysis engaged in by Centerview (and not the
analysis in total) has the potential to create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion.
Selected Public Company Analysis, page 44
7.
Please revise to include the full selected public company analysis instead of a summary. Also please identify all the selected companies.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 46 and 47 of the Amended Proxy Statement.
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8.
Please revise to disclose the data underlying the results described in this section and to show how that information resulted in the multiples and values disclosed. For example, disclose the enterprise
value for each selected company that is the basis for the multiples disclosed on page 44.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on pages 46 and 47 of the Amended Proxy Statement.
9.
See our last comment above. Explain how the selected companies were chosen by revising the disclosure in the second full paragraph on page 44 to describe in more detail the “certain operational, business
and/or financial characteristics” Centerview considered comparable to the Company.
Response:
The Company respectfully acknowledges the Staff’s comment and has revised the disclosure on page 46 of the Amended Proxy Statement.
Position of the Purchaser Filing Parties as to the Fairness of the Merger, page 46
10.
Refer to the last bullet point beginning on page 47. Please revise the disclosure in the third paragraph of this section to clarify whether the analysis and resulting conclusions that the Purchaser Filing
Parties adopt as their own include Centerview’s analyses and discussion. See Question 20 of Exchange Act Release No. 34-17719 (April 13, 1981). If the Purchase Filing Parties do not adopt Centerview’s analyses and discussion as their own,
then revise the disclosure to include disclosure responsive to Item 1014 of Regulation M-A and to address the factors listed in Inst