economic, regulatory and legislative changes, technological developments, shifting client needs and increased competition from established and new competitors.
We do not believe there is any single competitor with the breadth of our solutions, and thus our competitors vary for each of our solutions. Our primary
competitors include Accenture, Accolade, ADP, Benefitfocus, bswift, Businessolver, Cognizant, Conduent, Deloitte, eHealth, Empower, Fidelity, GoHealth, Grand Rounds, HealthEquity, Mercer, OneSource Virtual, Quantum Health, SD Worx, Vanguard, Voya,
WTW, and Workday.
We compete primarily on the basis of product and service quality, technology, breadth of offerings, ease of use and accessibility of
technology, data protection, innovation, trust and reliability, price, and reputation.
FACTORS AFFECTING THE COMPARABILITY OF OUR RESULTS OF
OPERATIONS
As a result of a number of factors, our historical results of operations are not comparable from period to period and may not be comparable
to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors that may impact the comparability of our results of operations in future operations.
Impact of the Business Combination
Alight is
subject to corporate level tax rates at the federal, state and local levels. The Predecessor was and is treated as a flow-through entity for U.S. federal income tax purposes, and as such, has generally not been subject to U.S. federal income tax at
the entity level. Accordingly, other than for certain consolidated subsidiaries of the Predecessor that are structured as corporations and unless otherwise specified, the historical results of operations and other financial information presented
does not include any provision for U.S. federal income tax.
Alight (together with certain corporate subsidiaries through which it owns its interest in
the Predecessor) pays U.S. federal and state income taxes as a corporation on its share of our taxable income. The Business Combination was accounted for as a business combination using the acquisition method of accounting. Accordingly, the assets
and liabilities, including any identified intangible assets, were recorded at their preliminary fair values at the date of completion of the Business Combination, with any excess of the purchase price over the preliminary fair value recorded as
goodwill. The application of business combination accounting required the use of significant estimates and assumptions.
As a result of the application of
accounting for the Business Combination, the historical Consolidated Financial Statements of the Predecessor are not necessarily indicative of the Successors future results of operations, financial position and cash flows. For example,
increased tangible and intangible assets resulting from adjusting the basis of tangible and intangible assets to their fair value would result in increased depreciation and amortization expense in the periods following the consummation of the
Business Combination.
In connection with the Business Combination, we entered into a Tax Receivable Agreement (TRA) with certain of our pre-Business Combination owners that provides for the payment by the Alight to such owners of 85% of the benefits that Alight is deemed to realize as a result of the Companys share of existing tax basis
acquired in the Business Combination and other tax benefits related to entering into the TRA.
Additionally, in connection with the Business Combination,
we have accounted for the issuance of warrants and Seller Earnout contingent consideration as liabilities which require remeasurement to fair value at the end of each reporting period, as applicable and adopted the Alight 2021 Omnibus Incentive Plan
which will result in higher share-based compensation expenses. Lastly, the redemption of our Unsecured Senior Notes and partial paydown of the Term Loan in conjunction with the Business Combination, will result in lower interest expense.
Impact of Becoming a Public Company
We expect to
incur additional costs associated with operating as a public company. We expect that these costs will include additional human resources, legal, consulting, regulatory, insurance, accounting, investor relations
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