First Advantage Buys Fast to Boost Services: The year-old company emphasizes cross-selling in vetting and related services

In early May, First Advantage Corp. announced an agreement to acquire CIC Enterprises, a specialist in tax services for businesses, including employment-related tax incentives. The work is both complex and time-consuming and CIC takes the job off the hands of customers for a handsome fee. At first blush, the deal seems a bit unusual for First Advantage, a company known largely for providing a wide range of vetting and investigative services to businesses, landlords, insurers, and other clients. But to the company’s CEO, seasoned acquirer John W. Long, it jibes perfectly with his strategy of building a suite of related services that can be packaged and cross-sold with current core operations that include screening prospective employees and screening for drug abuse in the workplace. “We’ve never bundled this (tax) service before with background and drug screening, but it’s sold to the same people,” he says. “I’m going to be one of the first people to go out there and actually make this part of the business by using the ability to cross-sell. Everything is about selling more services, and I’m trying to find a way to make my package sweeter than the next guy’s. So I’m adding a new product that never has been in the bundle in this industry before.” Long figures that First Advantage, formed only a year ago via the merger of US SEARCH.com Inc., a consumer-oriented location and verification firm, and the screening division of First American Corp., reached stand-alone status at precisely the right time. Spurred by anti-terror efforts and various internal problems, businesses are increasingly looking to outsiders to perform sophisticated screening, investigative, and other risk management functions. The more services First Advantage can provide under that umbrella, the tougher competitor it will be. But the best results, he says, will go to the swift – underscoring the aggressive m&a drive that netted about 18 deals in the company’s first year and has a lot more in the pipeline. With the backing of his former employer, title insurer and information provider First American, Long concentrated initially on building scale in employment screening, e.g., Proudfoot, Liberatore Services, Total Information Source, and drug screening, e.g., Employee Information Services, Greystone Health Services, Continental Compliance. It also gained or widened positions in tenant screening, insurance fraud investigations, vehicle records, and other areas. More recently, acquisition targets shifted to the cross-selling side – with CIC, property management software firm Realeum Inc., and computer forensics and investigative consultant CoreFacts LLC joining the fold. Despite the diversity of operations, First Advantage regards the corporate human resources head as the primary customer and the key target for cross-selling. “HR people buy 49 different services and I provide maybe three of them,” Long says. As a result, he sees First Advantage branching into a number of related areas that could include employee assessment testing and psychological profiling of job candidates, as well as expansion of current, smallish offerings in employee fitness programs. Vehicle records information could be more aggressively marketed to insurance agents and fleet managers who would buy other screening services also. “Sector by sector, we will figure out the services to sell them that they don’t have today,” he says. But the company, which has two m&a people in-house as well as outside consultants, wants to move fast. The industry, Long believes, is consolidating and there may be but five to 10 major screening players in 10 years. Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com