LifeLock 2013 Annual Report Download - page 22

•diversion of management’s attention to acquisition efforts; and
•the ability to obtain any requisite governmental or other approvals.
As a part of our acquisition strategy, we frequently engage in acquisition discussions. In connection with these discussions, we and potential
acquisition candidates often exchange confidential operational and financial information, conduct due diligence inquiries, and consider the structure, terms,
and conditions of the potential acquisition. Potential acquisition discussions frequently take place over a long period of time and involve diff icult business
integration and other issues, including, in some cases, management succession and related matters. As a result of these and other factors, a number of
potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated, despite the expenditure
of time and resources, which affect our results.
Any borrowings made to finance future acquisitions could make us more vulnerable to a downturn in our operating results, a downturn in economic
conditions, or increases in interest rates on borrowings. If our cash flow from operating activities is insufficient to meet our debt service requirements, we
could be required to sell additional equity securities, refinance our obligations, or dis pose of assets in order to meet our debt service requirements. Adequate
financing may not be available if and when we need it or may not be available on terms acceptable to us. The failure to obtain sufficient financing on favorable
terms and conditions could have a material adverse effect on our growth prospects and our business, financial condition, and operating results.
If we finance any future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for common
stock, existing stockholders will experience dilution in the voting power of their common stock and earnings per share could be negatively impacted. The extent
to which we will be able or willing to use our common stock for acquisitions w ill depend on the market price of our common stock from time to time and the
willingness of potential sellers to accept our common stock as full or partial consideration for the sale of their businesses. Our inability to use our common
stock as consideration, to generate cash from operations, or to obtain additional funding through debt or equity financings in order to pursue an acquisition
program could materially limit our growth.
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In order to pursue a successful acquisition strategy, we will need to integrate the operations of any acquired businesses into our operations, including
centralizing certain functions and pursuing programs and processes aimed at leveraging our revenue and growth opportunities. The integration of the
management, operations, and facilities of acquired businesses with our own could involve difficulties, which could adversely affect our growth rate and
operating results.
Our experience in acquiring other businesses is limited. Our only acquisitions to date have been the acquisition of ID Analytics in March 2012 and the
acquisition of Lemon in December 2013. We may not realize all of the benefits anticipated with such acquisitions and may experience unanticipated detriments
as a result of such acquisitions. Although we have finalized our integration with ID Analytics, we are in the process of integrating with Lemon. As with any
acquisition, we may be unable to complete effec tively an integration of the management, operations, facilities, and accounting and information systems of the
acquired business with our own; to manage efficiently the combined operations of the acquired business with our operations; to achieve our operating, growth,
and performance goals for the acquired business; to achieve additional revenue as a result of our expanded operations; or to achieve operating efficiencies or
otherwise realize cost savings as a result of anticipated acquisition synergies. The integration of acquired businesses, including our acquisitions of ID
Analytics and Lemon, involves numerous risks, including the following:
•integrating the different businesses, operations, locations, and technologies;
•communicating to customers our perceived benefits of the acquisition and addressing any related concerns they might have;
•the potential disruption of our core businesses;
•risks associated with entering markets and businesses in which we have little or no prior experience;
•diversion of management’s attention from our core businesses;
•adverse effects on existing business relationships with suppliers and customers;
•failure to retain key customers, suppliers, or personnel of acquired businesses;
•adjusting to changes in key personnel post-combination;
•adjusting to increased governmental regulations;
•in connection with the acquisition of companies with foreign operations, integrating operations across different cultures and languages and
addressing the particular economic, currency, political, and regulatory risks associated with specific countries;
•managing the varying intellectual property protection strategies and other activities of the acquired company;
•the potential strain on our financial and managerial controls and reporting systems and procedures;
•greater than anticipated costs and expenses related to the integration of the acquired business with our business;
•potential unknown liabilities associated with the acquired company;
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