DEFM14A 1 d11162ddefm14a.htm DEFM14A DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14a-101)

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

Conyers Park II Acquisition Corp.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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CONYERS PARK II ACQUISITION CORP.

999 VANDERBILT BEACH ROAD, SUITE 601

NAPLES, FL 34108

Dear Conyers Park II Acquisition Corp. Stockholders,

On behalf of the board of directors (the “Conyers Park Board”) of Conyers Park II Acquisition Corp., a Delaware corporation (“Conyers Park”, “we” or “our”), we cordially invite you to a special meeting (the “special meeting”) of stockholders of Conyers Park, to be held at 10:00 a.m. Eastern Time, on October 27, 2020, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022.

On September 7, 2020, Conyers Park entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Conyers Park, CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), Advantage Solutions Inc., a Delaware corporation (“Advantage”), and Karman Topco L.P., a Delaware limited partnership (“Topco”), a copy of which is attached to the accompanying proxy statement as Annex A, which, among other things, provides for Merger Sub to be merged with and into Advantage with Advantage being the surviving company in the merger (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”). As a result of the Merger, Conyers Park will own 100% of the outstanding common stock of Advantage as the surviving company in the Merger and each outstanding share of common stock of Advantage will be cancelled and extinguished and collectively converted into the right to receive the merger consideration in accordance with the Merger Agreement. Following the consummation of the Merger, Conyers Park will own all of the outstanding equity interests of the surviving company and Topco will own a portion of Conyers Park Class A common stock (as defined in the accompanying proxy statement).

Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to Topco, as sole stockholder of Advantage (the “Closing Consideration”), will be equal to the sum of (a) 203,750,000 shares of Conyers Park Class A common stock plus (b) 5,000,000 shares of Conyers Park Class A common stock, which will remain subject to forfeiture unless and until vesting upon the achievement of a market performance condition described further in the accompanying proxy statement (the “Performance Shares”).

At the special meeting, Conyers Park stockholders will be asked to consider and vote upon:

(1) Proposal No. 1 — To consider and vote upon a proposal to approve the business combination described in the accompanying proxy statement, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in the accompanying proxy statement — we refer to this proposal as the “business combination proposal”;

(2) Proposal No. 2 — To consider and vote upon a proposal to approve and adopt the second amended and restated certificate of incorporation of Conyers Park in the form attached hereto as Annex B (the “second amended and restated certificate of incorporation”) — we refer to this proposal as the “charter proposal”;

(3) Proposal No. 3 — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the United States Securities and Exchange Commission (“SEC”) requirements — we refer to this proposal as the “governance proposal”;

(4) Proposal No. 4 — To consider and vote on a proposal to approve and adopt the Advantage Solutions Inc. 2020 Incentive Plan (the “Incentive Plan”) and the material terms thereunder, including the authorization of the initial share reserve thereunder — we refer to this proposal as the “incentive plan proposal.” A copy of the Incentive Plan is attached to the accompanying proxy statement as Annex G;

(5) Proposal No. 5 — To consider and vote on a proposal to approve and adopt the Advantage Solutions Inc. 2020 Employee Stock Purchase Plan (the “Employee Purchase Plan”) and the material terms thereunder,


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including the authorization of the initial share reserve thereunder — we refer to this proposal as the “employee purchase plan proposal.” A copy of the Employee Purchase Plan is attached to the accompanying proxy statement as Annex H;

(6) Proposal No. 6 — To consider and vote upon a proposal to approve, for purposes of complying with the applicable provisions of NASDAQ (as defined below) Listing Rule 5635, the issuance of more than 20% of Conyers Park’s issued and outstanding shares of common stock in connection with the business combination, including, without limitation, the PIPE Investment (as described below) — we refer to this proposal as the “NASDAQ proposal”; and

(7) Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal or the NASDAQ proposal — we refer to this proposal as the “adjournment proposal.

Each of these proposals is more fully described in the accompanying proxy statement, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Conyers Park Common Stock at the close of business on October 6, 2020 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.

After careful consideration, the Conyers Park Board has determined that the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal, the NASDAQ proposal and the adjournment proposal are fair to and in the best interests of Conyers Park and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the employee purchase plan proposal, “FOR” the NASDAQ proposal and “FOR” the adjournment proposal, if presented. When you consider the Conyers Park Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the business combination that are different from, or in addition to, the interests of Conyers Park stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Conyers Park Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Conyers Park stockholders that they vote in favor of the proposals presented at the special meeting.

Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal, the employee purchase plan proposal and the NASDAQ proposal. If any of those proposals are not approved, we will not consummate the Transactions.

To raise additional proceeds to fund the Transactions, Conyers Park has entered into subscription agreements (containing commitments to funding that are subject only to conditions that are generally aligned with the conditions set forth in the Merger Agreement), pursuant to which certain investors have agreed to purchase an aggregate of 70,000,000 shares of Conyers Park Class A common stock, which we refer to as the “PIPE Investment,” for a price of $10.00 per share for an aggregate commitment of $700,000,000. Certain equityholders of Topco will also participate in the PIPE Investment.

All Conyers Park stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.

Conyers Park’s units, Conyers Park Class A common stock and warrants are currently listed on the Nasdaq Stock Market LLC (the “NASDAQ”) under the symbols CPAAU, CPAA and CPAAW, respectively.


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Pursuant to Conyers Park’s current certificate of incorporation, a holder of public shares may demand that Conyers Park redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Conyers Park redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the business combination proposal by delivering their stock to Conyers Park’s transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be redeemed. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to Conyers Park’s transfer agent in order to validly redeem his, her or its shares. If a holder of public shares properly demands redemption and votes for or against the business combination proposal, Conyers Park will redeem each public share for a full pro rata portion of the trust account (as defined in the accompanying proxy statement), calculated as of two business days prior to the consummation of the business combination.

Conyers Park is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements. Upon consummation of the Transactions, Conyers Park will cease to be an “emerging growth company.”

The accompanying proxy statement provides you with detailed information about the Transactions and other matters to be considered at the special meeting of Conyers Park’s stockholders. We encourage you to carefully read the entire document, including the Annexes attached thereto. You should also carefully consider the risk factors described in section entitled “Risk Factors” beginning on page 66.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

The Transactions described in the accompanying proxy statement have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the merits or fairness of the business combination or related Transactions, or passed upon the accuracy or adequacy of the disclosure in the accompanying proxy statement. Any representation to the contrary is a criminal offense.

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors
 

 

  LOGO

 

  James M. Kilts
  Executive Chairman of the Board of Directors

October 9, 2020

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST TENDER YOUR SHARES TO CONYERS PARK’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE ORIGINALLY SCHEDULED VOTE ON THE BUSINESS COMBINATION PROPOSAL AT THE SPECIAL MEETING. THE REDEMPTION RIGHTS INCLUDE THE REQUIREMENT THAT A HOLDER MUST IDENTIFY HIMSELF, HERSELF OR ITSELF IN WRITING AS A BENEFICIAL OWNER AND PROVIDE HIS, HER OR ITS LEGAL NAME, PHONE NUMBER AND ADDRESS TO CONYERS PARK’S TRANSFER AGENT IN ORDER TO VALIDLY REDEEM HIS, HER OR ITS SHARES. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE


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CERTIFICATE TO CONYERS PARK’S TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CONYERS PARK STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

The accompanying proxy statement is dated October 9, 2020 and is first being mailed to Conyers Park stockholders on or about October 9, 2020.


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CONYERS PARK II ACQUISITION CORP.

999 VANDERBILT BEACH ROAD, SUITE 601

NAPLES, FL 34108

NOTICE OF

SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON OCTOBER 27, 2020

TO THE STOCKHOLDERS OF CONYERS PARK II ACQUISITION CORP.

NOTICE IS HEREBY GIVEN that a special meeting (the “special meeting”) of stockholders of Conyers Park II Acquisition Corp., a Delaware corporation (“Conyers Park”, “we” or “our”), will be held at 10:00 a.m. Eastern Time, on October 27, 2020, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022.

On behalf of Conyers Park’s board of directors (the “Conyers Park Board”), you are cordially invited to attend the special meeting, to conduct the following business items:

(1) Proposal No. 1 — To consider and vote upon a proposal to approve the business combination described in this proxy statement, including (a) adopting the Agreement and Plan of Merger, dated as of September 7, 2020 (the “Merger Agreement”), by and among Conyers Park, CP II Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Conyers Park (“Merger Sub”), Advantage Solutions Inc., a Delaware corporation (“Advantage”), and Karman Topco L.P., a Delaware limited partnership (“Topco”), a copy of which is attached to the accompanying proxy statement as Annex A, which, among other things, provides for Merger Sub to be merged with and into Advantage with Advantage being the surviving company in the merger (the “Merger”, and together with the other transactions contemplated by the Merger Agreement, the “Transactions”) and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement — we refer to this proposal as the “business combination proposal”;

(2) Proposal No. 2 — To consider and vote upon a proposal to approve and adopt the second amended and restated certificate of incorporation of Conyers Park in the form attached hereto as Annex B (the “second amended and restated certificate of incorporation”) — we refer to this proposal as the “charter proposal”;

(3) Proposal No. 3 — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the United States Securities and Exchange Commission (“SEC”) requirements — we refer to this proposal as the “governance proposal”;

(4) Proposal No. 4 — To consider and vote on a proposal to approve and adopt the Advantage Solutions Inc. 2020 Incentive Plan (the “Incentive Plan”) and the material terms thereunder, including the authorization of the initial share reserve thereunder — we refer to this proposal as the “incentive plan proposal.” A copy of the Incentive Plan is attached to the accompanying proxy statement as Annex G;

(5) Proposal No. 5 — To consider and vote on a proposal to approve and adopt the Advantage Solutions Inc. 2020 Employee Stock Purchase Plan (the “Employee Purchase Plan”) and the material terms thereunder, including the authorization of the initial share reserve thereunder — we refer to this proposal as the “employee purchase plan proposal.” A copy of the Employee Purchase Plan is attached to the accompanying proxy statement as Annex H;

(6) Proposal No. 6 — To consider and vote upon a proposal to approve, for purposes of complying with the applicable provisions of NASDAQ Listing Rule 5635, the issuance of more than 20% of Conyers Park’s issued and outstanding shares of common stock in connection with the business combination, including, without limitation, the PIPE Investment (as described below) — we refer to this proposal as the “NASDAQ proposal”; and


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(7) Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal or the NASDAQ proposal — we refer to this proposal as the “adjournment proposal.

Each of these proposals is more fully described in the accompanying proxy statement, which we encourage you to read carefully and in its entirety before voting. Only holders of record of Conyers Park Common Stock at the close of business on October 6, 2020 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.

After careful consideration, the Conyers Park Board has determined that the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal, the NASDAQ proposal and the adjournment proposal are fair to and in the best interests of Conyers Park and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the employee purchase plan proposal, “FOR” the NASDAQ proposal and “FOR” the adjournment proposal, if presented. When you consider the Conyers Park Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the business combination that are different from, or in addition to, the interests of Conyers Park stockholders generally. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination” for additional information. The Conyers Park Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Conyers Park stockholders that they vote in favor of the proposals presented at the special meeting.

Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal, the employee purchase plan proposal and the NASDAQ proposal. If any of those proposals are not approved, we will not consummate the Transactions.

To raise additional proceeds to fund the Transactions, Conyers Park has entered into subscription agreements (containing commitments to funding that are subject only to conditions that generally align with the conditions set forth in the Merger Agreement), pursuant to which certain investors have agreed to purchase an aggregate of 70,000,000 shares of Conyers Park Class A common stock, which we refer to as the “PIPE Investment,” for a price of $10.00 per share for an aggregate commitment of $700,000,000. Certain equityholders of Topco will also participate in the PIPE Investment.

Pursuant to Conyers Park’s current certificate of incorporation, a holder of public shares may demand that Conyers Park redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Conyers Park redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the business combination proposal by delivering their stock to Conyers Park’s transfer agent prior to the vote at the meeting. If the business combination is not completed, these shares will not be redeemed. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to Conyers Park’s transfer agent in order to validly redeem his, her or its shares. If a holder of public shares properly demands redemption, Conyers Park will redeem each public share for a full pro rata portion of the trust account, calculated as of two business days prior to the consummation of the business combination.

All Conyers Park stockholders are cordially invited to attend the special meeting and we are providing the accompanying proxy statement and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.


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Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors

 

  LOGO

 

  James M. Kilts
  Executive Chairman of the Board of Directors

October 9, 2020

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE CONYERS PARK REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CONYERS PARK’S TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE ORIGINALLY SCHEDULED VOTE ON THE BUSINESS COMBINATION PROPOSAL AT THE SPECIAL MEETING. THE REDEMPTION RIGHTS INCLUDE THE REQUIREMENT THAT A HOLDER MUST IDENTIFY HIMSELF, HERSELF OR ITSELF IN WRITING AS A BENEFICIAL OWNER AND PROVIDE HIS, HER OR ITS LEGAL NAME, PHONE NUMBER AND ADDRESS TO CONYERS PARK’S TRANSFER AGENT IN ORDER TO VALIDLY REDEEM HIS, HER OR ITS SHARES. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO CONYERS PARK’S TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF CONYERS PARK STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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TABLE OF CONTENTS

 

     Page  

FREQUENTLY USED TERMS

     1  

SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS

     5  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

     7  

SUMMARY OF THE PROXY STATEMENT

     17  

CONYERS PARK’S SUMMARY HISTORICAL FINANCIAL INFORMATION

     46  

ADVANTAGE’S SUMMARY HISTORICAL FINANCIAL INFORMATION

     48  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     59  

COMPARATIVE PER SHARE DATA

     62  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     64  

RISK FACTORS

     66  

SPECIAL MEETING OF CONYERS PARK STOCKHOLDERS

     105  

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

     110  

PROPOSAL NO. 2 — THE CHARTER PROPOSAL

     149  

PROPOSAL NO. 3 — THE GOVERNANCE PROPOSAL

     151  

PROPOSAL NO. 4 — THE INCENTIVE PLAN PROPOSAL

     153  

PROPOSAL NO. 5 — THE EMPLOYEE PURCHASE PLAN PROPOSAL

     159  

PROPOSAL NO. 6 — THE NASDAQ PROPOSAL

     164  

PROPOSAL NO. 7 — THE ADJOURNMENT PROPOSAL

     166  

OTHER INFORMATION RELATED TO CONYERS PARK

     167  

CONYERS PARK’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     180  

INFORMATION ABOUT ADVANTAGE

     185  

MANAGEMENT OF ADVANTAGE

     207  

MANAGEMENT AFTER THE BUSINESS COMBINATION

     208  

EXECUTIVE COMPENSATION OF ADVANTAGE

     217  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     233  

CONYERS PARK’S SELECTED HISTORICAL FINANCIAL INFORMATION

     245  

ADVANTAGE’S SELECTED HISTORICAL FINANCIAL INFORMATION

     247  

ADVANTAGE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     250  

PRICE RANGE OF SECURITIES AND DIVIDENDS

     303  

BENEFICIAL OWNERSHIP OF SECURITIES

     304  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     310  

SECURITIES ACT RESTRICTIONS ON RESALE OF CONYERS PARK’S SECURITIES

     320  

APPRAISAL RIGHTS

     321  

SUBMISSION OF STOCKHOLDER PROPOSALS

     321  

FUTURE STOCKHOLDER PROPOSALS

     321  

OTHER STOCKHOLDER COMMUNICATIONS

     321  

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

     322  

WHERE YOU CAN FIND MORE INFORMATION

     322  

INDEX TO FINANCIAL STATEMENTS

     F-1  

 

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FREQUENTLY USED TERMS

Unless otherwise stated in this proxy statement or the context otherwise requires, references to:

2014 Topco Acquisition” are to the acquisition of Advantage Sales & Marketing Inc. by Karman Topco L.P., a Delaware limited partnership, on July 25, 2014;

Advantage” are to Advantage Solutions Inc., a Delaware corporation;

Advantage Available Cash” are to cash and cash equivalents of Advantage and its subsidiaries in an amount of (i) $125.0 million plus (ii) the amount (which shall not be less than zero) by which the net debt of Advantage and its subsidiaries as of 11:59 pm Eastern Time on the date immediately preceding the date of Closing is less than $2,867,239,613. For the purpose of this definition, “net debt” means (x) the outstanding principal amount of and accrued and unpaid interest on, and other payment obligations for, all indebtedness for borrowed money of Advantage and its subsidiaries and indebtedness issued by Advantage and its subsidiaries in substitution or exchange for borrowed money minus (y) cash and cash equivalents of Advantage and its subsidiaries;

Advantage Sponsors” are to the Advantage Topco Acquisition Sponsors and Bain Capital and Yonghui Investment Limited;

Advantage Topco Acquisition Sponsors” are to certain entities that are or are controlled by equity funds affiliated with or advised by CVC Capital Partners, Leonard Green & Partners, Juggernaut Capital Partners, or Centerview Capital Management, LLC;

Available Closing Conyers Park Cash” are to an amount equal to (i) all amounts in Conyers Park’s trust account (after reduction for the aggregate amount of payments required to be made in connection with any redemptions by Conyers Park’s public stockholders in connection with the Merger), plus (ii) all other cash and cash equivalents of Conyers Park, plus (iii) the aggregate amount of cash that has been funded to and remains with, or that will be funded concurrently with the Closing to, Conyers Park pursuant to the Subscription Agreements as of immediately prior to the Closing, plus (iv) proceeds from debt financing whether funded or available to be funded at the Closing (through term loans or revolver availability) in connection with any redemptions by Conyers Park’s public stockholders in connection with the Merger, in an amount not to exceed $100.0 million, plus (v) Advantage Available Cash;

Centerview Capital” are to Centerview Capital Holdings LLC, a Delaware limited liability company, and its affiliates, including Centerview Capital Management, LLC;

Centerview Capital Consumer” are collectively to (i) the consumer private equity investment business sponsored by Centerview Capital, and (ii) the various entities and funds that are engaged in such business, including Centerview Capital Management, LLC;

Closing” are to the consummation of the Transactions;

Closing Consideration” are to 203,750,000 shares of Conyers Park Class A common stock plus the Performance Shares;

Closing Date” are to the date on which the Transactions are consummated;

completion window” are to the period following the completion of the Conyers Park IPO at the end of which, if Conyers Park has not completed an initial business combination, it will redeem 100% of the public shares at a per share price, payable in cash, equal to (a) the aggregate amount then on deposit in the trust account, including interest and not previously released to us annually to pay up to $1,000,000 of Conyers Park’s working capital requirements as well as to pay Conyers Park’s franchise and income taxes (net of permitted withdrawals

 

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and up to $100,000 of interest to pay dissolution expenses), divided by (b) the number of then-outstanding public shares, subject to applicable law and certain conditions. The completion window ends on July 22, 2021;

Conyers Park” are to Conyers Park II Acquisition Corp., a Delaware Corporation;

Conyers Park Class A common stock” are, prior to consummation of the Transactions, to Conyers Park Class A common stock, par value $0.0001 per share, and, following consummation of the Transactions, to the Class A common stock, par value $0.0001 per share, of New Advantage;

Conyers Park Class B common stock” are to Conyers Park Class B common stock, par value $0.0001 per share;

Conyers Park Common Stock” are to Conyers Park Class A common stock and Conyers Park Class B common stock;

Conyers Park IPO” are to the initial public offering by Conyers Park, which closed on July 22, 2019;

Credit Facilities” are to the Revolving Credit Facility, the AR Facility, the First Lien Term Loans and the Second Lien Term Loans;

current certificate of incorporation” are to Conyers Park’s amended and restated certificate of incorporation in effect as of the date of this proxy statement;

Daymon” are to Daymon Worldwide Inc.;

Daymon Acquisition” are to Advantage’s strategic acquisition of Daymon on December 18, 2017;

DGCL” are to the Delaware General Corporation Law, as amended;

“Employee Purchase Plan” are to the Advantage Solutions Inc. 2020 Employee Stock Purchase Plan;

Exchange Act” are to the Securities Exchange Act of 1934, as amended;

First Lien Term Loans” are to Advantage Sales & Marketing Inc.’s Initial First Lien Term Loans, the first lien term loans funded under the Delayed Draw Commitments, the Incremental First Lien Term Loans and the other first lien term loans funded under the incremental facilities;

founder shares” are to shares of Conyers Park Class B common stock and Conyers Park Class A common stock issued upon the automatic conversion thereof at the time of Conyers Park’s initial business combination. The founder shares are held of record by the Sponsor and Conyers Park’s independent directors as of the record date;

HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

Incentive Plan” are to the Advantage Solutions Inc. 2020 Incentive Plan;

Insiders” are to James M. Kilts, David J. West, Brian K. Ratzan, Ronald Blaylock, Peter Klein, Irene Rosenfeld and Joseph Schena;

Merger” or “business combination” are to the merger of Merger Sub with and into Advantage with Advantage being the surviving company in the merger;

Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of September 7, 2020, by and among Conyers Park, Advantage, Topco and Merger Sub;

 

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Merger Sub” are to CP II Merger Sub, Inc.;

Minimum Cash Condition” are to the requirement under the Merger Agreement that Available Closing Conyers Park Cash at Closing be at least $1.15 billion;

New Advantage” are to Conyers Park after the Merger;

New Revolving Credit Facility” are to Advantage Sales & Marketing Inc.’s senior secured asset-based revolving credit facility in an aggregate principal amount of up to $400.0 million on terms and conditions set forth in the Debt Commitment Letter;

New Senior Secured Credit Facilities” are to the New Revolving Credit Facility and the New Term Loan Facility;

New Term Loan Facility” are to Advantage Sales & Marketing Inc.’s senior secured first lien term loan credit facility in an aggregate principal amount of $2,100 million on terms and conditions set forth in the Debt Commitment Letter;

our Class A common stock” are to the Class A common stock, par value $0.0001 per share, of the post-combination company;

our common stock” are, prior to consummation of the Transactions, to Conyers Park Class A common stock and Conyers Park Class B common stock, and, following consummation of the Transactions, to the Class A common stock, par value $0.0001 per share, of New Advantage;

Performance Shares” are to the 5,000,000 shares of Conyers Park Class A common stock to be issued as a portion of the Closing Consideration to Topco, but which will vest, if at all, if the closing price for our Class A common stock after the Closing equals or exceeds $12.00 per share (subject to adjustments for any cash or in-kind dividends paid on our Class A common stock) for any period of 20 trading days out of 30 consecutive trading days during the five-year period after the Closing;

PIPE Investment” are to the private placement pursuant to which Conyers Park entered into Subscription Agreements with certain investors whereby such investors have agreed to subscribe for shares of Conyers Park Class A common stock at a purchase price of $10.00 per share. The PIPE Investors, other than the Sponsor and the Advantage Sponsors and their affiliates participating in the PIPE Investment, have agreed to purchase an aggregate of 50,000,000 shares of Class A common stock. Certain of the Advantage Sponsors or their affiliates and the Sponsor have agreed to purchase an aggregate of 20,000,000 shares of Class A common stock, or, in their sole discretion, up to 45,000,000 shares in the event Conyers Park’s public stockholders exercise their redemption rights in connection with the Merger and in order to meet the Minimum Cash Condition;

PIPE Investors” are to the investors participating in the PIPE Investment;

private placement warrants” are to Conyers Park’s warrants issued to the Sponsor in a private placement simultaneously with the closing of the Conyers Park IPO;

public shares” are to shares of Conyers Park Class A common stock sold as part of the units in the Conyers Park IPO (whether they were purchased in the Conyers Park IPO or thereafter in the open market);

public stockholders” are to the holders of Conyers Park’s public shares, including the Sponsor and Conyers Park’s officers and directors to the extent the Sponsor and Conyers Park’s officers or directors purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;

 

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public warrants” are to Conyers Park’s warrants sold as part of the units in the Conyers Park IPO (whether they were purchased in the Conyers Park IPO or thereafter in the open market);

Registration Rights Agreement” are to the Registration Rights Agreement, dated September 7, 2020, by and among Conyers, the Sponsor, Topco, the Advantage Sponsors and the other parties named therein;

Revolving Credit Facility” are to Advantage’s existing senior secured revolving credit facility;

SEC” are to the United States Securities and Exchange Commission;

Second Lien Term Loans” are to Advantage Sales & Marketing Inc.’s existing second lien term loans;

Securities Act” are to the Securities Act of 1933, as amended;

Sponsor” are to Conyers Park II Sponsor LLC, a Delaware limited liability company and an affiliate of Centerview Capital;

Sponsor Agreement” are to the Sponsor Agreement, dated as of September 7, 2020, by and among Conyers Park, the Sponsor, Advantage, Ronald E. Blaylock, Peter Klein, Irene Rosenfeld and Joseph Schena;

Stockholders Agreement” are to the Stockholders Agreement dated September 7, 2020, by and among Conyers Park, the Sponsor, Topco, and certain equityholders of Topco and certain other parties thereto;

Subscription Agreements” are to the common stock subscription agreements entered into by and among Conyers Park, on the one hand, and the PIPE Investors, on the other hand, in each case, dated as of September 7, 2020 and entered into in connection with the PIPE Investment, each in the form of the Subscription Agreement or the Advantage Sponsor Subscription Agreement, as applicable, attached hereto as Annex E and Annex F, respectively;

Topco are to Karman Topco L.P., a Delaware limited partnership;

Transactions” are to the Merger, together with the other transactions contemplated by the Merger Agreement (including the consummation of the PIPE Investment, the entry into the New Senior Secured Credit Facilities and the payoff of the First Lien Term Loans, the Second Lien Term Loans, the AR Facility and the other indebtedness under the Credit Facilities) and the related agreements;

trust account” are to the trust account of Conyers Park that holds the proceeds from the Conyers Park IPO; and

warrants” are to the public warrants and the private placement warrants.

 

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SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS

This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals” and “Summary of the Proxy Statement,” summarizes certain information contained in this proxy statement, but does not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting. In addition, for definitions used commonly throughout this proxy statement, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

 

   

Conyers Park II Acquisition Corp., a Delaware corporation, which we refer to as “Conyers Park,” “we,” “us” or “our,” is a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

 

   

On July 22, 2019, Conyers Park consummated its initial public offering of 45,000,000 units, including 5,000,000 units under the underwriters’ over-allotment option, with each unit consisting of one share of Conyers Park Class A common stock and one-fourth of one warrant to purchase one share of Conyers Park Class A common stock. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $450,000,000. Simultaneously with the consummation of the initial public offering, Conyers Park consummated the private placement of 7,333,333 warrants at a price of $1.50 per warrant, generating total proceeds of $11,000,000.

 

   

Following the consummation of the Conyers Park IPO, $450,000,000 was deposited into a U.S.-based trust account with Continental Stock Transfer & Trust Company acting as trustee. Except as described in the prospectus for the Conyers Park IPO, these proceeds will not be released until the earlier of the completion of an initial business combination and Conyers Park’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the completion window.

 

   

Advantage was incorporated under the laws of Delaware in June 2014. Advantage is a wholly owned subsidiary of Topco, and is a leading a business solutions provider to consumer goods manufacturers and retailers. Advantage’s customizable suite of technology-enabled sales and marketing solutions is designed to help manufacturers and retailers across a broad range of channels drive consumer demand, increase sales, and achieve operating efficiencies. See the sections entitled “Information About Advantage,” “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management after the Business Combination.

 

   

On September 7, 2020, Conyers Park entered into an Agreement and Plan of Merger with Advantage, Topco and Merger Sub, which, among other things, provides for Merger Sub to be merged with and into Advantage with Advantage being the surviving company in the Merger.

 

   

Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to Topco will be equal to the sum of (a) 203,750,000 shares of Conyers Park Class A common stock plus (b) the Performance Shares.

 

   

Pursuant to the PIPE Investment, Conyers Park has agreed to issue and sell to the PIPE Investors, and the PIPE Investors have agreed to buy from Conyers Park, 70,000,000 shares of Conyers Park Class A common stock at a purchase price of $10.00 per share for an aggregate commitment of $700,000,000. Certain of the Advantage Sponsors or their affiliates and the Sponsor will also participate in the PIPE Investment.

 

   

It is anticipated that, upon completion of the business combination: (i) Conyers Park’s public stockholders (other than the PIPE Investors) will retain an ownership interest of approximately 13.64% in New Advantage; (ii) the PIPE Investors will own approximately 21.21% of the post-combination company; (iii) the Sponsor and current Conyers Park directors will own approximately 3.41% of the post-combination company; and (iv) Topco (excluding any shares purchased by Topco equityholders in the PIPE Investment and any Performance Shares) will own approximately 61.74% of the post-

 

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combination company. These levels of ownership interest: (a) exclude the impact of the shares of Conyers Park Class A common stock underlying warrants, (b) assume that no Conyers Park public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Conyers Park’s trust account, (c) assume that no shares are issued pursuant to the Advantage Solutions Inc. 2020 Incentive Plan and (d) assume that no shares are issued pursuant to the Advantage Solutions Inc. 2020 Employee Stock Purchase Plan.

 

   

Conyers Park management and the Conyers Park Board considered various factors in determining whether to approve the Merger Agreement and the Transactions contemplated thereby, including the Merger. For more information about the reasons that the Conyers Park Board considered in determining its recommendation, please see the section entitled “Proposal No. 1  The Business Combination Proposal  The Conyers Park Board’s Reasons for the Approval of the Transactions.” When you consider the Conyers Park Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the business combination that are different from, or in addition to, the interests of Conyers Park stockholders generally. Please see the section entitled “Proposal No. 1  The Business Combination Proposal  Interests of Certain Persons in the Business Combination” for additional information. The Conyers Park Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Conyers Park stockholders that they vote “FOR” the proposals presented at the special meeting.

 

   

At the special meeting, Conyers Park’s stockholders will be asked to consider and vote on the following proposals:

 

   

a proposal to approve the business combination described in this proxy statement, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement. Please see the section entitled “Proposal No. 1  The Business Combination Proposal”;

 

   

a proposal to approve and adopt the second amended and restated certificate of incorporation of Conyers Park in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2  The Charter Proposal”;

 

   

a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3  The Governance Proposal”;

 

   

a proposal to approve and adopt the Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4  The Incentive Plan Proposal”;

 

   

a proposal to approve and adopt the Employee Purchase Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 5  The Employee Purchase Plan Proposal”;

 

   

a proposal to approve, for purposes of complying with the applicable provisions of NASDAQ Listing Rule 5635, the issuance of more than 20% of Conyers Park’s issued and outstanding shares of common stock in connection with the business combination, including, without limitation, the PIPE Investment. Please see the section entitled “Proposal No. 6  The NASDAQ Proposal”; and

 

   

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal or the NASDAQ proposal. Please see the section entitled “Proposal No. 7  The Adjournment Proposal.”

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The questions and answers below highlight only selected information from this proxy statement and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed business combination. The following questions and answers do not include all the information that is important to Conyers Park stockholders. Stockholders are urged to read carefully this entire proxy statement, including the Annexes and the other documents referred to herein, to fully understand the proposed business combination and the voting procedures for the special meeting.

 

Q.

Why am I receiving this proxy statement?

 

A.

Conyers Park and Advantage have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement. A copy of the Merger Agreement is attached to this proxy statement as Annex A, and Conyers Park encourages its stockholders to read it in its entirety. Conyers Park’s stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement and approve the transactions contemplated thereby, which, among other things, includes provisions for Merger Sub to be merged with and into Advantage with Advantage being the surviving company in the Merger as a wholly owned subsidiary of Conyers Park. Please see the section entitled “Proposal No. 1  The Business Combination Proposal.”

This proxy statement and its Annexes contain important information about the proposed business combination and the other matters to be acted upon at the special meeting. You should read this proxy statement and its Annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its Annexes.

 

Q.

When and where is the Special Meeting?

 

A.

The special meeting will be held on October 27, 2020 at 10:00 a.m. Eastern Time at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022.

 

Q.

What are the proposals on which I am being asked to vote at the special meeting?

 

A.

The stockholders of Conyers Park will be asked to consider and vote on the following proposals at the special meeting:

 

  1.

a proposal to approve the business combination described in this proxy statement, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement. Please see the section entitled “Proposal No. 1  The Business Combination Proposal”;

 

  2.

a proposal to approve and adopt the second amended and restated certificate of incorporation of Conyers Park in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2  The Charter Proposal”;

 

  3.

a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately, in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3  The Governance Proposal”;

 

  4.

a proposal to approve and adopt the Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4  The Incentive Plan Proposal”;

 

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  5.

a proposal to approve and adopt the Employee Purchase Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 5  The Employee Purchase Plan Proposal”;

 

  6.

a proposal to approve, for purposes of complying with the applicable provisions of NASDAQ Listing Rule 5635, the issuance of more than 20% of Conyers Park’s issued and outstanding shares of common stock in connection with the business combination, including, without limitation, the PIPE Investment. Please see the section entitled “Proposal No. 6  The NASDAQ Proposal”; and

 

  7.

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal or the NASDAQ proposal. Please see the section entitled “Proposal No. 7  The Adjournment Proposal.”

Conyers Park will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement contains important information about the proposed business combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.

Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal, the employee purchase plan proposal and the NASDAQ proposal. If any of those proposals are not approved, we will not consummate the Transactions.

The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement.

 

Q:

How will the COVID-19 pandemic impact in-person voting at the special meeting?

 

A:

We intend to hold the special meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website https://www.cstproxy.com/conyersparkiiacquisitioncorp/sm2020, and we encourage you to check this website prior to the meeting if you plan to attend.

 

Q.

Why is Conyers Park proposing the business combination?

 

A.

Conyers Park was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities.

On July 22, 2019, Conyers Park completed its initial public offering of units, with each unit consisting of one share of its Conyers Park Class A common stock and one-quarter of one warrant to purchase one share of Conyers Park Class A common stock at a price of $11.50, raising total gross proceeds of approximately $450,000,000. Since the Conyers Park IPO, Conyers Park’s activity has been limited to the evaluation of business combination candidates.

Advantage was incorporated under the laws of Delaware in June 2014. Advantage is a wholly owned subsidiary of Topco, and is a leading a business solutions provider to consumer goods manufacturers and retailers. Advantage’s customizable suite of technology-enabled sales and marketing solutions is designed to help manufacturers and retailers across a broad range of channels drive consumer demand, increase sales, and achieve operating efficiencies. See the sections entitled “Information About Advantage,” “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management after the Business Combination.

The Conyers Park Board considered the results of the due diligence review of Advantage’s business, including its current prospects for growth in executing upon and achieving its business plan. As a result,

 

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Conyers Park believes that a business combination with Advantage will provide Conyers Park’s stockholders with an opportunity to participate in the ownership of a company with significant growth potential. Please see the section entitled “Proposal No. 1  The Business Combination Proposal  The Conyers Park Board’s Reasons for Approval of the Transactions.

 

Q.

Why is Conyers Park providing stockholders with the opportunity to vote on the business combination?

 

A.

Under our current certificate of incorporation, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the business combination proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the closing of the business combination.

 

Q.

What will happen in the business combination?

 

A.

Pursuant to the Merger Agreement, and upon the terms and subject to the conditions set forth therein, Conyers Park will acquire Advantage in a transaction we refer to as the business combination. At the closing of the business combination contemplated by the Merger Agreement, among other things, Merger Sub will merge with and into Advantage with Advantage being the surviving company in the Merger as a wholly owned subsidiary of Conyers Park. As a result of the Merger, at the closing of the business combination, Conyers Park will own 100% of the outstanding common stock of Advantage and each share of common stock of Advantage will have been cancelled and converted into the right to receive a portion of the merger consideration.

 

Q.

Following the business combination, will Conyers Park’s securities continue to trade on a stock exchange?

 

A.

Yes. We intend to apply to continue the listing of Conyers Park Class A common stock and public warrants on NASDAQ. In connection with the business combination, Conyers Park will change its name to Advantage Solutions Inc. and its Class A common stock and warrants will begin trading on the NASDAQ under the symbols “ADV” and “ADVW”, respectively. As a result, our publicly traded units will separate into the component securities upon consummation of the business combination and will no longer trade as a separate security.

 

Q.

How will the holders of Conyers Park’s units be impacted by the business combination?

 

A.

As part of its initial public offering, Conyers Park issued 45,000,000 units, each consisting of one share of Class A common stock and one-fourth of one warrant to purchase one share of Class A common stock, which currently trade on the NASDAQ under the symbol CPAAU. As of the consummation of the business combination, Conyers Park’s outstanding units will be mandatorily separated into their component parts – one share of Class A common stock and one-fourth of one warrant to purchase one share of Class A common stock – and the units will cease trading. As a result, following the business combination each unitholder’s account, in lieu of units, will reflect ownership of the number of shares of Class A common stock and warrants underlying such holder’s units. If any unitholder would, upon such separation, be entitled to receive a fractional interest in a warrant, the number of warrants the holder will be entitled to receive will be rounded down to the nearest whole number of warrants.

 

Q.

How will the business combination impact the shares of Conyers Park outstanding after the business combination?

 

A.

As a result of the business combination and the consummation of the transactions contemplated by the Merger Agreement and the related agreements, including, without limitation, the PIPE Investment, the

 

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  amount of common stock outstanding will increase to 330,000,000 shares of Conyers Park Class A common stock (assuming that no shares of Conyers Park Class A common stock are elected to be redeemed by Conyers Park stockholders and excluding the Performance Shares). Additional shares of Conyers Park Class A common stock may be issuable in the future as a result of the issuance of additional shares that are not currently outstanding, including issuance of shares of Conyers Park Class A common stock upon exercise of the warrants from time to time after the business combination. The issuance and sale of such shares in the public market could adversely impact the market price of Conyers Park Class A common stock, even if its business is doing well. Pursuant to the Incentive Plan, a copy of which is attached to this proxy statement as Annex G, following the closing of the business combination and subject to the approval of the applicable award agreements by the board of directors of the post-combination entity, Conyers Park may grant an aggregate amount of up to 49,917,647 additional shares of New Advantage common stock. Pursuant to the Employee Purchase Plan, a copy of which is attached to this proxy statement as Annex H, following the closing of the business combination, Conyers Park may grant an aggregate amount of up to 12,479,412 additional shares of New Advantage common stock.

 

Q.

Will the management of Advantage change in the business combination?

 

A.

We anticipate that all of the executive officers of Advantage will remain with New Advantage. In addition, Cameron Breitner, Ryan Cotton, Tanya Domier, Timothy Flynn, Tiffany Han and Jonathan Sokoloff have each been nominated to serve as directors of New Advantage upon completion of the Transactions. Please see the section entitled “Management After the Business Combination” for additional information.

 

Q.

What equity stake will current stockholders of Conyers Park, the PIPE Investors, the Sponsor and Topco hold in New Advantage after the closing?

 

A.

It is anticipated that, upon completion of the business combination: (i) Conyers Park’s public stockholders (other than the PIPE Investors) will retain an ownership interest of approximately 13.64% in the post-combination company; (ii) the PIPE Investors will own approximately 21.21% of New Advantage; (iii) the Sponsor and certain Conyers Park directors will own approximately 3.41% of New Advantage; and (iv) Topco (excluding any shares purchased by Topco equityholders in the PIPE Investment and any Performance Shares) will own approximately 61.74% of New Advantage. These levels of ownership interest: (a) exclude the impact of the shares of Conyers Park Class A common stock underlying warrants, (b) assume that no Conyers Park public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Conyers Park’s trust account, (c) assume that no shares are issued pursuant to the Incentive Plan and (d) assume that no shares are issued pursuant to the Employee Purchase Plan.

For more information, please see the sections entitled “Summary of the Proxy Statement — Impact of the Business Combination on New Advantage Public Float,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Proposal No. 4 — The Incentive Plan Proposal” and “Proposal No. 5  — The Employee Purchase Plan Proposal.”

 

Q.

Will Conyers Park obtain new financing in connection with the Transactions?

 

A.

Yes. Conyers Park has entered into subscription agreements (containing commitments to funding that are subject only to conditions that generally align with the conditions set forth in the Merger Agreement) with the PIPE Investors, pursuant to which Conyers Park has agreed to issue and sell to the PIPE Investors, and the PIPE Investors have agreed to buy from Conyers Park, 70,000,000 shares of Conyers Park Class A common stock at a purchase price of $10.00 per share for an aggregate commitment of $700,000,000. Certain of the Advantage Sponsors or their affiliates and the Sponsor will also participate in the PIPE Investment.

 

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Advantage Sales & Marketing Inc., a wholly owned subsidiary of Advantage, has also obtained a debt commitment letter, which we refer to as the “Debt Commitment Letter,” from a syndicate of lenders to provide debt financing, which we refer to as the “Debt Financing,” to Advantage, consisting of a senior secured first lien term loan facility in an aggregate principal amount of up to $2,100 million and a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $400 million (only a portion of which, if any, is expected to be drawn or used at the closing of the Merger). The proceeds of the Debt Financing are expected to be used, together with the proceeds from the trust account and the PIPE Investment to (i) repay in full and terminate obligations under the Credit Facilities and (ii) pay fees, commissions and expenses in connection with the foregoing. Up to $100 million of the New Revolving Credit Facility may be used in order to satisfy the Minimum Cash Condition. Please see the section entitled “Proposal No. 1  The Business Combination Proposal  Sources and Uses for the Business Combination” for additional information.

 

Q.

What conditions must be satisfied to complete the Business Combination?

 

A.

There are a number of closing conditions in the Merger Agreement, including the expiration of the applicable waiting period under the HSR Act and the approval by the Conyers Park stockholders of the business combination proposal, the NASDAQ proposal, the charter proposal and the incentive plan proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the business combination, please see the section entitled “Proposal No. 1  The Business Combination Proposal  Certain Agreements Related to the Business Combination  Merger Agreement.”

 

Q.

What happens if I sell my shares of Conyers Park Class A common stock before the special meeting?

 

A.

The record date for the special meeting is earlier than the date that the business combination is expected to be completed. If you transfer your shares of Conyers Park Class A common stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares of Conyers Park Class A common stock because you will no longer be able to deliver them for cancellation upon consummation of the business combination. If you transfer your shares of Conyers Park Class A common stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.

 

Q.

What constitutes a quorum at the special meeting?

 

A.

A majority of the voting power of all issued and outstanding shares of common stock entitled to vote as of the record date at the special meeting must be present via the virtual meeting platform, or represented by proxy, at the special meeting to constitute a quorum and in order to conduct business at the special meeting. Abstentions will be counted as present for the purpose of determining a quorum. As of the record date for the special meeting, 28,125,001 shares of our common stock would be required to be present at the special meeting to achieve a quorum.

 

Q.

What vote is required to approve the proposals presented at the special meeting?

 

A.

The approval of each of the business combination proposal, the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the employee purchase plan proposal, the NASDAQ proposal and the adjournment proposal requires the affirmative vote of a majority of the votes cast by holders of Conyers Park’s outstanding shares of common stock represented at the special meeting by attendance via the virtual meeting website or by proxy and entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a Conyers Park stockholders’ failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal, the NASDAQ proposal and the adjournment proposal will have no effect on such proposals.

 

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The approval of the charter proposal requires the affirmative vote of holders of a majority of Conyers Park’s outstanding shares of common stock entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Conyers Park stockholders’ failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “AGAINST” such proposal.

 

Q.

How many votes do I have at the special meeting?

 

A.

Our stockholders are entitled to one vote on each proposal presented at the special meeting for each share of common stock held of record as of October 6, 2020, the record date for the special meeting. As of the close of business on the record date, there were 56,250,000 outstanding shares of our common stock.

 

Q.

Why is Conyers Park proposing the governance proposal?

 

A.

As required by applicable SEC guidance, Conyers Park is requesting that its stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the second amended and restated certificate of incorporation that materially affect stockholder rights. This separate vote is not otherwise required by Delaware law separate and apart from the charter proposal, but pursuant to SEC guidance, Conyers Park is required to submit these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is an advisory vote, and is not binding on Conyers Park and the Conyers Park Board (separate and apart from the approval of the charter proposal). Furthermore, the business combination is not conditioned on the separate approval of the governance proposal (separate and apart from approval of the charter proposal). Please see the section entitled “Proposal No. 3  The Governance Proposal” for additional information.

 

Q.

Did the Conyers Park Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination?

 

A.

The Conyers Park Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the business combination with Advantage. The officers and directors of Conyers Park have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Conyers Park’s financial and other advisors, including Goldman Sachs & Co. LLC and Centerview Partners LLC, enabled them to perform the necessary analyses and make determinations regarding the Transactions. In addition, Conyers Park’s officers and directors and Conyers Park’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the Conyers Park Board in valuing Advantage’s business, and assuming the risk that the Conyers Park Board may not have properly valued such business.

 

Q.

Do I have redemption rights?

 

A.

If you are a holder of public shares, you have the right to demand that Conyers Park redeem such shares for a pro rata portion of the cash held in Conyers Park’s trust account. We sometimes refers to these rights to demand redemption of the public shares as “redemption rights.”

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 10% of the public shares. Accordingly, all public shares in excess of 10% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.

Under Conyers Park’s current certificate of incorporation, the business combination may be consummated only if Conyers Park has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand redemption of their shares for cash.

 

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Q.

How do I exercise my redemption rights?

 

A.

If you are a holder of public shares and wish to exercise your redemption rights, you must demand that Conyers Park redeem your shares in cash no later than the second business day preceding the vote on the business combination proposal by delivering your stock to Conyers Park’s transfer agent physically or electronically using the Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system prior to the vote at the special meeting. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was approximately $453,742,623.42, or $10.08 per share, as of October 6, 2020, the record date for meeting). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the business combination. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of Conyers Park’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the business combination proposal. Therefore, the per-share distribution from the trust account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal other than the business combination proposal will have no impact on the amount you will receive upon exercise of your redemption rights.

Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the special meeting. If you deliver your shares for redemption to Conyers Park’s transfer agent and later decide prior to the special meeting not to elect redemption, you may request that Conyers Park’s transfer agent return the shares (physically or electronically). You may make such request by contacting Conyers Park’s transfer agent at the address listed at the end of this section.

Any corrected or changed proxy card or written demand of redemption rights must be received by Conyers Park’s transfer agent prior to the vote taken on the business combination proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the special meeting.

If a holder of public shares properly demands their shares be redeemed properly made as described above, then, if the business combination is consummated, Conyers Park will redeem these shares for a pro rata portion of funds deposited in the trust account. If you exercise your redemption rights, then you will be exchanging your shares of Conyers Park Class A common stock for cash.

 

Q.

Do I have appraisal rights if I object to the proposed business combination?

 

A.

No. Neither Conyers Park stockholders nor its unit or warrant holders, solely in their capacity as unit or warrant holders, have appraisal rights in connection with the business combination under the DGCL. Please see the section entitled “Special Meeting of Conyers Park Stockholders  Appraisal Rights” for additional information.

 

Q.

What happens to the funds deposited in the trust account after consummation of the business combination?

 

A.

The net proceeds of the Conyers Park IPO, a total of $450,000,000, were placed in the trust account immediately following the Conyers Park IPO. After consummation of the business combination, the funds in the trust account will be used to pay holders of the public shares who exercise redemption rights, to pay fees and expenses incurred in connection with the business combination (including aggregate fees of up to $15,750,000 as deferred underwriting commissions) and for working capital purposes of the post-combination company.

Please see the section entitled “Proposal No. 1 — The Business Combination — Sources and Uses for the Business Combination” for additional information.

 

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Q.

What happens if a substantial number of public stockholders vote in favor of the business combination proposal and exercise their redemption rights?

 

A.

Conyers Park’s public stockholders may vote in favor of the business combination and still exercise their redemption rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. Notwithstanding the foregoing, under Conyers Park’s current certificate of incorporation, the business combination may be consummated only if Conyers Park has at least $5,000,001 of net tangible assets after giving effect to all holders of public shares that properly demand redemption of their shares for cash.

 

Q.

What happens if the business combination is not consummated?

 

A.

If Conyers Park does not complete the business combination with Advantage for whatever reason, Conyers Park would search for another target business with which to complete a business combination. If Conyers Park does not complete a business combination with Advantage or another target business by July 22, 2021, Conyers Park must redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to (a) the aggregate amount then held in the trust account, including interest and not previously released to us annually to pay up to $1,000,000 of Conyers Park’s working capital requirements as well as to pay Conyers Park’s franchise and income taxes (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by (b) the number of then-outstanding public shares, subject to applicable law and certain conditions. The Sponsor and the Insiders have no redemption rights in the event a business combination is not effected in the completion window and, accordingly, their founder shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to Conyers Park’s outstanding warrants. Accordingly, the warrants will be worthless.

 

Q.

How does the Sponsor intend to vote on the proposals?

 

A.

The Sponsor owns of record and is entitled to vote an aggregate of approximately 20% of the outstanding shares of Conyers Park Common Stock as of the record date. The Sponsor and the Insiders have agreed to vote any founder shares and any public shares held by them as of the record date in favor of the Transactions. The Sponsor and Insiders may have interests in the business combination that may conflict with your interests as a stockholder. See the sections entitled “Summary of the Proxy Statement  Interests of Certain Persons in the Business Combination” and “Proposal No. 1  The Business Combination Proposal  Interests of Certain Persons in the Business Combination” for additional information.

 

Q.

When do you expect the business combination to be completed?

 

A.

It is currently anticipated that the business combination will be consummated promptly following the special meeting which is set for October 27, 2020, subject to the satisfaction of customary closing conditions; however, such meeting could be postponed or adjourned, as described above. For a description of the conditions to the completion of the business combination, please see the section entitled “Proposal No. 1  The Business Combination Proposal  The Merger Agreement  Conditions to the Closing of the Transactions.

 

Q.

What do I need to do now?

 

A.

Conyers Park urges you to read carefully and consider the information contained in this proxy statement, including the Annexes, and to consider how the business combination will affect you as a stockholder, unit holder and/or warrant holder of Conyers Park. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card, or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or other nominee.

 

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Q.

How do I vote?

 

A.

The special meeting will be held at 10:00 a.m. Eastern Time, on October 27, 2020, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022.

If you are a holder of record of Conyers Park Common Stock on October 6, 2020, the record date for the special meeting, you may vote at the special meeting in person or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote, obtain a proxy from your broker, bank or nominee.

 

Q.

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A.

No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the stockholders at the special meeting will be considered non-routine and, therefore, your broker, bank or nominee cannot vote your shares without your instruction on any of the proposals presented at the special meeting. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q.

How will a broker non-vote impact the results of each proposal?

 

A.

Broker non-votes will count as a vote “AGAINST” the charter proposal but will not have any effect on the outcome of any other proposals.

 

Q.

May I change my vote after I have mailed my signed proxy card?

 

A.

Yes. Stockholders of record may send a later-dated, signed proxy card to Conyers Park’s transfer agent at the address set forth at the end of this section so that it is received prior to the vote at the special meeting or attend the special meeting and vote. Stockholders also may revoke their proxy by sending a notice of revocation to Conyers Park’s transfer agent, which must be received prior to the vote at the special meeting.

 

Q.

What happens if I fail to take any action with respect to the special meeting?

 

A.

If you fail to take any action with respect to the special meeting and the business combination is approved by stockholders, the business combination will be consummated in accordance with the terms of the Merger Agreement. If you fail to take any action with respect to the special meeting and the business combination is not approved, we will not consummate the business combination.

 

Q.

What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A.

Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the special meeting.

 

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Q.

What should I do if I receive more than one set of voting materials?

 

A.

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your Conyers Park shares.

 

Q.

Who can help answer my questions?

 

A.

If you have questions about the Transactions or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:

Conyers Park II Acquisition Corp.

999 Vanderbilt Beach Road, Suite 601

Naples, FL 34108

Tel: (212) 429-2211

You may also contact the proxy solicitor for Conyers Park at:

Morrow Sodali LLC

470 West Avenue

Stamford CT 06902

Call Toll Free (800) 662-5200

Banks and brokers call (203) 658-9400

Email: CPAA.info@morrowsodali.com

To obtain timely delivery, our stockholders must request any additional materials no later than five business days prior to the special meeting. You may also obtain additional information about Conyers Park from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your stock (either physically or electronically) to Conyers Park’s transfer agent at the address below prior to the vote at the special meeting. See the section entitled “Proposal No. 1  The Business Combination Proposal  Redemption.”

If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

Attention: Mark Zimkind

Email: mzimkind@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT

This summary highlights selected information from this proxy statement and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the business combination proposal, you should read this entire document carefully, including the Annexes and other documents referred to herein. The Merger Agreement is the legal document that governs the Transactions that will be undertaken in connection with the business combination. It is also described in detail in this proxy statement in the section entitled “Proposal No. 1 — The Business Combination Proposal — Certain Agreements Related to the Business Combination — Merger Agreement.”

Unless otherwise specified, all share calculations (a) exclude the impact of the shares of Conyers Park Class A common stock underlying warrants, (b) assume that no Conyers Park public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Conyers Park’s trust account and (c) assume that no shares are issued pursuant to the Incentive Plan or the Employee Purchase Plan.

The Parties

Conyers Park

Conyers Park II Acquisition Corp. is a blank check company formed in order to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities. Conyers Park was incorporated under the laws of Delaware on May 2, 2019.

On July 22, 2019, Conyers Park closed its initial public offering of 45,000,000 units, including the exercise of the over-allotment option to the extent of 5,000,000 units, with each unit consisting of one share of its Class A common stock and one-fourth of one warrant to purchase one share of its Class A common stock at a purchase price of  $11.50 per share, subject to adjustment as provided in Conyers Park’s final prospectus filed with the Securities and Exchange Commission on July 19, 2019 (File No. 333-232449). The units from the Conyers Park IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $450,000,000.

Simultaneously with the consummation of the Conyers Park IPO and the exercise of the underwriters’ over-allotment option, Conyers Park consummated the private sale of 7,333,333 warrants at $1.50 per warrant for an aggregate purchase price of $11,000,000. A total of $450,000,000 was deposited into the trust account and the remaining net proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The Conyers Park IPO was conducted pursuant to a registration statement on Form S-1 that became effective on July 17, 2019. As of October 6, 2020, the record date for the meeting, there was approximately $453,742,623.42 held in the trust account.

Conyers Park’s units, Class A common stock and warrants are listed on the NASDAQ under the symbols CPAAU, CPAA and CPAAW, respectively.

The mailing address of Conyers Park’s principal executive office is 999 Vanderbilt Beach Road, Suite 601, Naples, Florida 34108. Its telephone number is (212) 429-2211. After the consummation of the business combination, its principal executive office will be that of Advantage.

Merger Sub

CP II Merger Sub, Inc. is a wholly owned subsidiary of Conyers Park formed solely for the purpose of effectuating the Merger described herein (“Merger Sub”). Merger Sub was incorporated under the laws of Delaware as a corporation on August 31, 2020. Merger Sub owns no material assets and does not operate any business.



 

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The mailing address of Merger Sub’s principal executive office is 999 Vanderbilt Beach Road, Suite 601, Naples, Florida 34108. Its telephone number is (212) 429-2211. After the consummation of the business combination, Merger Sub will cease to exist as a separate legal entity.

Topco

Karman Topco L.P. is the parent entity of Advantage and was formed as a limited partnership under the laws of Delaware on June 13, 2014 in connection with the 2014 Topco Acquisition.

The mailing address of Topco’s principal executive office is c/o Advantage Solutions, Attn Legal Dept. General Counsel, 18100 Von Karman Ave., Suite 1000, Irvine, California 92612. Topco’s telephone number is (949) 797-2900.

Advantage

Advantage was incorporated under the laws of Delaware on June 2014. Advantage is a wholly owned subsidiary of Topco, and is a leading business solutions provider to consumer goods manufacturers and retailers. Advantage’s customizable suite of technology-enabled sales and marketing solutions is designed to help manufacturers and retailers across a broad range of channels drive consumer demand, increase sales, and achieve operating efficiencies. Through Advantage’s sales segment, Advantage serves as a critical link between consumer goods manufacturers and their retailer partners. Advantage’s sales associates prepare and present to retailers a business case to increase distribution of manufacturers’ products and optimize how they are displayed, priced, and promoted both in-store and online. Advantage also makes in-store visits to ensure such products are adequately stocked and properly displayed. Through Advantage’s marketing segment, Advantage helps brands and retailers reach consumers through two main platforms. The first is Advantage’s retail experiential business, also known as sampling or demo, where they manage highly customized and deeply embedded large scale sampling programs (both in-store and online) with multi-decade relationships for leading retailers. These programs are mission-critical platforms for brands and retailers to drive sales, promote loyalty and build trial. The second is Advantage’s collection of specialized agency businesses where it provides private label services to retailers and develops granular marketing programs for brands and retailers that are designed to influence shoppers on their paths to, and at the point of, purchase using its proprietary insights on shopper behavior, analytics, brand knowledge, and understanding of manufacturer and retailer strategies. In 2019, Advantage provided services to over 3,500 manufacturers, and provided services for products located at more than 200,000 retail locations.

The mailing address of Advantage’s principal executive office is 18100 Von Karman Avenue, Suite 1000, Irvine, CA 92612. Its telephone number is (949) 797-2900. As part of the business combination, Merger Sub will merge with and into Advantage with Advantage surviving such merger as a wholly owned subsidiary of Conyers Park.

Emerging Growth Company

Conyers Park is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find Conyers Park’s securities less attractive as a result, there may be a less active trading market for Conyers Park’s securities and the prices of its securities may be more volatile or otherwise impacted.



 

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Conyers Park will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Conyers Park IPO, (b) in which Conyers Park has total annual gross revenue of at least $1.07 billion or (c) in which Conyers Park is deemed to be a large accelerated filer, which means the market value of Conyers Park Common Stock that is held by non-affiliates exceeds $700.0 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which Conyers Park has issued more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

Upon consummation of the Transactions, Conyers Park will cease to be an “emerging growth company.”

The Business Combination Proposal

Structure of the Transactions

Pursuant to the Merger Agreement, a business combination between Conyers Park and Advantage will be effected through the Merger, whereby Merger Sub will merge with and into Advantage with Advantage surviving such merger as a wholly owned subsidiary of Conyers Park.

Merger Consideration

Subject to the terms of the Merger Agreement, the aggregate consideration to be paid to Topco, as agent on behalf of Topco’s equityholders, will be equal to the sum of (a) 203,750,000 shares of Conyers Park Class A common stock and (b) the Performance Shares. For more information regarding the sources and uses of the funds utilized to consummate the Transactions, please see the section entitled “Proposal No. 1The Business Combination Proposal  Sources and Uses for the Business Combination.” For more information regarding the Performance Shares, please see the section entitled “Proposal No. 1 — The Business Combination Proposal.”

Related Agreements

Registration Rights Agreement

In connection with the execution of the Merger Agreement, Conyers Park, CVC ASM Holdco, L.P. (the “CVC Stockholder”), the entities identified therein under the heading “LGP Stockholders” (collectively, the “LGP Stockholder”) and BC Eagle Holdings, L.P. (the “Bain Stockholder”), the Sponsor, Topco, Karman II Coinvest LP, a Delaware limited partnership (“Karman II Coinvest”), certain entities affiliated with Juggernaut Capital Partners, Centerview Capital, L.P., Centerview Employees, L.P., Yonghui Investment Limited (“YH”, and together with the Bain Stockholder, the “Daymon Investors”) and the other holders of Common Series B Units, Vested Common Series C Units and Vested Common Series C-2 Units of Topco (i.e., members of management of Advantage) (the “Contributing Investors”) entered into the Registration Rights Agreement, pursuant to which, among other things, certain of the parties thereto agreed not to effect the transfer of any equity securities of Conyers Park held by any of them during the lock-up period described therein (the “Lock-up Period”) and were granted certain registration rights and certain piggyback rights with respect to their respective shares of common stock of Conyers Park, on the terms and subject to the conditions therein.

In particular, the Registration Rights Agreement provides for the following registration rights:

 

   

Demand registration rights. At any time after the expiration of the Lock-up Period, Conyers Park will be required, upon the written request of the CVC Stockholder, the LGP Stockholders or Karman II Coinvest, to (i) subject to certain exceptions, deliver a written notice to each party to the Registration Rights Agreement offering such party the opportunity to include its registrable securities in such demand registration statement and (ii) thereafter, file a registration statement and use reasonable best efforts to effect the registration of all or part of their registrable securities. Conyers Park is not obligated to effect



 

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any demand registration if a demand registration or piggyback registration was declared effective or an underwritten shelf takedown was consummated within the preceding 90-day period or, if requested by the underwriter pursuant to the Registration Rights Agreement, the preceding 180-day period.

 

   

Centerview Capital, L.P. and Centerview Employees, L.P. demand registration rights. At any time following the earlier to occur of (i) the two-year anniversary of the consummation of the Business Combination and (ii) the consummation of certain other qualifying transactions, and provided that Centerview Capital, L.P. and Centerview Employees, L.P. shall not have had the opportunity to register its securities in a demand registration or piggyback registration in the preceding 180-day period, Centerview Capital, L.P. and Centerview Employees, L.P. will be able to require Conyers Park to use its reasonable best efforts to register Centerview Capital, L.P. and Centerview Employees, L.P.’s registrable securities under the Securities Act, including the right to require Conyers Park to register the sale of such shares on Form S-3. Centerview Capital, L.P. and Centerview Employees, L.P., together, are limited to requiring one such registration.

 

   

Daymon demand registration rights. At any time following the 18-month anniversary of the closing of the Merger, subject to certain restrictions, the designated representative of the Daymon Investors, on the behalf of the Daymon Investors, will be able to require Conyers Park to use its reasonable best efforts to register the Daymon Investors’ registrable securities under the Securities Act, including the right to require Conyers Park to register the sale of such shares on Form S-3. The Daymon Investors are limited to requiring two such registrations.

In addition, at any time following the 30-month anniversary of the closing of the Merger, if no demand registrations have yet been made by any party who holds demand registration rights under the Registration Rights Agreement (other than Centerview Capital, L.P. and Centerview Employees, L.P.), and subject to certain other restrictions, YH can cause the designated representative of the Daymon Investors to exercise one of the two demand registration rights described in the preceding paragraph.

In addition, at any time following the two-year anniversary of the closing of the Merger, if (i) the Daymon Investors have already made its two demand registrations described above and (ii) the Daymon Investors (and their respective permitted transferees) own 3% or less of the then-outstanding equity securities of Conyers Park, subject to certain restrictions, the designated representative of the Daymon Investors, on the behalf of the Daymon Investors, will be able to require Conyers Park to use its reasonable best efforts to register the Daymon Investors’ registrable shares, which may take the form of an underwritten takedown or will be on Form S-3. The Daymon Investors are limited to requiring one such registration.

 

   

Shelf registration rights. Within 180 days of the closing of the Merger, Conyers Park will be required to file a shelf registration statement pursuant to Rule 415 of the Securities Act and cause to be effective the registration of all of their registrable securities and, thereafter, use its commercially reasonable efforts to maintain the effectiveness of the shelf registration statement. At any time after the expiration of the Lock-up Period during which Conyers Park has an effective shelf registration statement with respect to a holder’s registrable securities, subject to certain exceptions, such holder of qualifying registrable securities may make a written request to effect a public offering, including pursuant to an underwritten shelf takedown, in accordance with the provisions governing demand registration rights.

 

   

Piggyback registration rights. At any time after the expiration of the Lock-up Period, if Conyers Park proposes to file a registration statement to register any of its equity securities under the Securities Act or to conduct a public offering, either for its own account or for the account of any other person, subject to certain exceptions, the parties to the Registration Rights Agreement are entitled to include their registrable securities in such registration statement.

 

   

Expenses and indemnification. All fees, costs and expenses of underwritten registrations will be borne by Conyers Park and underwriting discounts, selling commissions and transfer taxes will be borne by



 

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the holders of the shares being registered. The Registration Rights Agreement contains customary cross-indemnification provisions, under which Conyers Park is obligated to indemnify holders of registrable securities in the event of material misstatements or omissions in the registration statement attributable to Conyers Park, and holders of registrable securities are obligated to indemnify Conyers Park for material misstatements or omissions attributable to them.

 

   

Registrable securities. Securities of Conyers Park shall cease to be registrable securities when a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, such securities shall have been transferred pursuant to Rule 144, such securities shall have been transferred to any person other than a permitted transferee such that any subsequent transfer of such securities shall not require registration under the Securities Act or any applicable state law, or such securities shall have ceased to be outstanding.

 

   

Lock-up. Notwithstanding the foregoing, (i) each holder of qualifying registrable securities other than the Sponsor shall not transfer any securities of Conyers Park for 180 days following the closing date of the Merger and (ii) the Sponsor shall not transfer any securities of Conyers Park for one year after the closing date of the Merger, in each case, subject to certain exceptions.

Stockholders Agreement

In connection with the execution of the Merger Agreement, Conyers Park, Topco, the CVC Stockholder, the LGP Stockholders, the Bain Stockholder and the Sponsor (collectively, the “Stockholder Parties”) entered into the Stockholders Agreement, pursuant to which, among other things, the Stockholder Parties agreed to cast their votes such that the Conyers Park Board, after the closing of the Business Combination, is constituted as set forth in the Stockholders Agreement and the Merger Agreement and will have certain rights to designate directors to the Conyers Park Board, in each case, on the terms and subject to the conditions therein. The Stockholders Agreement is attached hereto as Annex C.

Under the Stockholders Agreement, each Stockholder Party has agreed to cast all votes to which such entities are entitled such that the Conyers Park Board shall be constituted as follows and as described in the section entitled “Management After the Business Combination”. For so long as the CVC Stockholder beneficially owns 10% or greater of Conyers Park Class A common stock, it shall be entitled to nominate two directors, who shall initially be Cameron Breitner and Tiffany Han (each, an “Initial CVC Director”), with such right (i) decreasing to one director at such time when the CVC Stockholder beneficially owns equal to or greater than 5% but less than 10% of Conyers Park Class A common stock; and (ii) terminating at such time when the CVC Stockholder beneficially owns less than 5% of Conyers Park Class A common stock. For so long as the LGP Stockholders beneficially own 10% or greater of Conyers Park Class A common stock, the LGP Stockholders shall be entitled to nominate two directors, who shall initially be Jon Sokoloff and Tim Flynn (each, an “Initial LGP Director”), with such right (i) decreasing to one director at such time when the LGP Stockholders beneficially own equal to or greater than 5% but less than 10% of Conyers Park Class A common stock; and (ii) terminating at such time when the LGP Stockholders beneficially own less than 5% of Conyers Park Class A common stock. For so long as the Bain Stockholder beneficially owns 5% or greater of Conyers Park Class A common stock, it shall be entitled to nominate one director, who shall initially be Ryan Cotton (the “Initial Bain Director”), with such right terminating at such time when the Bain Stockholder beneficially owns less than 5% of Conyers Park Class A common stock. For so long as the Sponsor or any of its permitted transferees is the record or beneficial owner of any Conyers Park Class A common stock, the Sponsor shall, for a period of five years following the Closing, be entitled to nominate three directors, who shall initially be James M. Kilts, David J. West and Brian K. Ratzan (each, an “Initial Sponsor Director”). In calculating the beneficial ownership percentages referenced above, the total number of issued and outstanding shares of Conyers Park Class A common stock used as the denominator in any such calculation shall at all times be deemed to be equal to the



 

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total number of shares of Conyers Park Class A common stock issued and outstanding immediately following the Closing (as adjusted for stock splits, combinations, reclassifications and similar transactions). Additionally, the Conyers Park Board shall also include the Chief Executive Officer of Advantage as of the Closing (the “CEO Director”) and four independent directors who shall be determined pursuant to the terms set forth in the Merger Agreement (each, an “Independent Director”).

Moreover, under the Stockholders Agreement, each Stockholder Party has agreed to cast all votes to which such entities are entitled such that the Conyers Park Board shall be divided into three classes of directors, with each class serving for staggered three-year terms, and such that (i) the Class I directors initially include one Initial CVC Director, one Initial LGP Director, one Initial Sponsor Director and two Independent Directors, (ii) the Class II directors initially include one Initial Sponsor Director, the Initial Bain Director and two Independent Directors and (iii) the Class III directors initially include one Initial CVC Director, one Initial LGP Director, one Initial Sponsor Director and the CEO Director. The initial term of the Class I directors shall expire immediately following Conyers Park’s first annual meeting of stockholders following the consummation of the Business Combination. The initial term of the Class II directors shall expire immediately following Conyers Park’s second annual meeting of stockholders following the consummation of the Business Combination. The initial term of the Class III directors shall expire immediately following Conyers Park’s third annual meeting of stockholders following the consummation of the Business Combination.

In addition, subject to applicable laws and stock exchange regulations, and subject to requisite independence requirements applicable to such committee, the CVC Stockholder, the LGP Stockholders, and the Sponsor shall, severally, have the right to have one CVC Director, one LGP Director and one Sponsor Director, respectively, appointed to serve on each committee of the Board for so long as the CVC Stockholder, the LGP Stockholders, and Sponsor, as applicable, has the right to designate at least one director for nomination to the Board.

Finally, pursuant to the Stockholders Agreement, Conyers Park and, with certain exceptions, its subsidiaries shall not, for so long as Topco and its permitted transferees collectively hold an amount of Conyers Park equity securities that is equal to 50% or more of the amount of securities Topco held as of immediately subsequent to the Closing, take any of the following actions without the approval of Topco: (i) any increase or decrease the size of the Conyers Park Board, other than in accordance with the Stockholders Agreement; (ii) any amendment, change, waiver, alteration or repeal of any provision of the organizational documents of Conyers Park that (a) amends or modifies any specific rights of Topco or (b) materially and adversely affects Topco in its capacity as a stockholder of Conyers Park; (iii) any acquisition or disposition of any one or more persons, equity interests, businesses or assets, or, subject to certain exceptions, the incurrence of any indebtedness by Conyers Park or any of its subsidiaries involving an aggregate value, purchase price, sale price or indebtedness, as applicable, in an amount in excess of certain EBITDA ratios set forth in the Stockholders Agreement; (iv) the termination or replacement of the Chief Executive Officer of Conyers Park (other than for cause); (v) the declaration and payment of any dividends or distributions, other than any dividends or distributions from any wholly owned subsidiary of Conyers Park either to Conyers Park or any other wholly owned subsidiaries of Conyers Park; or (vi) any redemption or repurchase of any shares of common stock of Conyers Park.

Sponsor Agreement

Pursuant to the Merger Agreement, Conyers Park, the Sponsor, Advantage, Ronald E. Blaylock, Peter Klein, Irene Rosenfeld and Joseph Schena entered into the Sponsor Agreement, pursuant to which the Sponsor and each of Ronald E. Blaylock, Peter Klein, Irene Rosenfeld and Joseph Schena has agreed to, among other things, (i) vote in favor of the Merger Agreement and the transactions contemplated thereby (including the Merger), (ii) waive their anti-dilution rights with respect to their shares of Conyers Park Class B common stock in connection with the issuance of shares pursuant to the PIPE Investment and (iii) be bound by certain transfer restrictions with respect to their shares of Conyers Park Class B common stock prior to the closing of the business combination, in each case, on the terms and subject to the conditions set forth in the Sponsor Agreement.



 

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Subscription Agreements

In connection with the execution of the Merger Agreement, Conyers Park entered into the Subscription Agreements with the PIPE Investors. The following summary of the Subscription Agreements and Advantage Sponsor Subscription Agreement is qualified by reference to the complete text of the forms of the Subscription Agreements copies of which are attached as Annex E and Annex F, respectively, to this proxy statement. All stockholders are encouraged to read the form of Subscription Agreement in its entirety for a more complete description of the terms and conditions thereof.

Shares purchased pursuant to the Subscription Agreements will be purchased for $10.00 per share. The PIPE Investors, other than the Sponsor and certain of Advantage Sponsors and their affiliates participating in the PIPE Investment, have agreed to purchase an aggregate of 50,000,000 shares of Class A common stock. The Sponsor and certain of the Advantage Sponsors or their affiliates have agreed to purchase an aggregate of 20,000,000 shares of Class A common stock, or, in their sole discretion, up to 45,000,000 shares in the event Conyers Park’ public stockholders exercise their redemption rights in connection with the Merger and in order to meet the Minimum Cash Condition.

The closing of the PIPE Investment is conditioned on all conditions set forth in the Merger Agreement having been satisfied or waived and other customary closing conditions, and the Transactions will be consummated immediately following the closing of the PIPE Investment.

The Subscription Agreements will terminate upon the earlier to occur of (i) the termination of the Merger Agreement, (ii) the mutual written agreement of the parties thereto and Advantage, (iii) 15 days after the Termination Date (as defined in the Merger Agreement) if the closing of the Transactions has not occurred by such date or (iv) if any conditions to the closing of set forth in the Subscription Agreement are not satisfied or waived on or prior to the closing.

Incentive Plan

On September 5, 2020, the Conyers Park Board adopted, subject to stockholder approval, the Incentive Plan for the purpose of providing a means through which to attract, motivate and retain key personnel and to provide a means whereby our directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our Class A common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. Stockholders are being asked to consider and approve the Incentive Plan, which will reserve an aggregate amount of up to 49,917,647 additional shares of New Advantage common stock for issuance pursuant to grants made under the Incentive Plan. Please see the section entitled “Proposal No. 4The Incentive Plan ProposalDescription of the Material Features of the Incentive Plan” for additional information.

Employee Purchase Plan

On September 5, 2020, the Conyers Park Board adopted, subject to stockholder approval, the Employee Purchase Plan for the purpose of providing a means through which to attract, motivate and retain personnel and to provide a means whereby our employees, can acquire and maintain an equity interest in us, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders. Stockholders are being asked to consider and approve the Employee Purchase Plan, which will reserve an aggregate amount of up to 12,479,412 additional shares of New Advantage common stock for issuance pursuant to grants made under the Employee Purchase Plan. Please see the section entitled “Proposal No. 5The Employee Purchase Plan Proposal  Description of the Material Features of the Employee Purchase Plan.”



 

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Financing of the Merger

We anticipate that the total funds needed to complete the Merger will be approximately $3.5 billion based upon (i) the repayment in full and termination of obligations under the Credit Facilities and (ii) the payment of fees, commissions and expenses in connection with the foregoing, which we expect will be funded through a combination of the following:

 

   

debt financing in an aggregate principal amount of approximately $2,500 million (the “Debt Financing” and the commitments therefor, the “Debt Financing Commitments”), consisting of (i) the New Term Loan Facility in an aggregate principal amount of $2,100 million and (ii) the New Revolving Credit Facility in an aggregate principal amount of $400.0 million (only a portion of which, if any, is expected to be drawn or used at the closing of the Merger), as set forth in the Debt Commitment Letter; and

 

   

the PIPE Investment.

Up to $100 million of the New Revolving Credit Facility may be used in order to satisfy the Minimum Cash Condition. The funding of the Debt Financing and PIPE Investment (collectively, the “Financing”) is subject to the satisfaction of the conditions set forth in the Debt Commitment Letter and Subscription Agreements under which the Debt Financing and the PIPE Investment will be provided, respectively. The obligation of the parties to complete the Merger is subject to a financing condition so the failure of Conyers Park and Advantage to obtain the Debt Financing (or to secure alternative financing) would likely result in the failure of the Merger to be completed. The final form of the Debt Financing is subject to change, including changes based on market conditions. See the section entitled “Proposal No. 1The Business Combination Proposal — Financing of the Merger” of this proxy statement for additional information.

Impact of the Business Combination on New Advantage’s Public Float

It is anticipated that, upon completion of the business combination: (i) Conyers Park’s public stockholders (other than the PIPE Investors) will retain an ownership interest of approximately 13.64% in New Advantage; (ii) the PIPE Investors will own approximately 21.21% of New Advantage; (iii) the Sponsor and current Conyers Park directors will own approximately 3.41% of New Advantage; and (iv) Topco (excluding any shares purchased by Topco equityholders in the PIPE Investment and the Performance Shares) will own approximately 61.74% of New Advantage. These levels of ownership interest: (a) exclude the impact of the shares of Conyers Park Class A common stock underlying warrants, (b) assume that no Conyers Park public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in Conyers Park’s trust account, (c) assume that no shares are issued pursuant to the Incentive Plan and (d) assume that no shares are issued pursuant to the Advantage Solutions Inc. 2020 Employee Purchase Plan. For more information, please see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information”, “Proposal No. 4The Incentive Plan Proposal” and “Proposal No. 5The Employee Purchase Plan Proposal.

The Minimum Cash Condition under the Merger Agreement may still be satisfied even in the event holders of all of Conyers Park’s public shares exercise their redemption rights in connection with the business combination. In the event of redemptions, the Minimum Cash Condition could still be satisfied using a combination of up to $100.0 million in borrowings under the New Revolving Credit Facility, Advantage Available Cash and up to an additional $250.0 million of Class A common stock purchased by the Sponsor and certain of the Advantage Sponsors or their affiliates in the PIPE Investment. Assuming the redemption of all of Conyers Park’s public shares, $100.0 million borrowed under the New Revolving Credit Facility, Advantage Available Cash of $125.0 million and an additional $219.9 million of Class A common stock purchased by certain of the Advantage Sponsors or their affiliates and the Sponsor in the PIPE Investment, upon completion of the business combination: (i) Conyers Park’s public stockholders (other than the PIPE Investors) would own



 

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none of New Advantage; (ii) the PIPE Investors will own approximately 29.97% of New Advantage; (iii) the Sponsor and current Conyers Park directors will own approximately 3.66% of New Advantage; and (iv) Topco (excluding any shares purchased by Topco equityholders in the PIPE Investment and any Performance Shares) will own approximately 66.37% of New Advantage. For more information, please see the section titled “Unaudited Pro Forma Condensed Combined Financial Information.”

The following table illustrates varying ownership levels in New Advantage, assuming no redemptions by Conyers Park’s public stockholders and the maximum redemptions by Conyers Park’s public stockholders as described above:

 

     No Redemptions     Maximum Redemptions  
     Number of
Shares
     %
Ownership
    Number of
Shares
     %
Ownership
 

Ownership of Class A Common Stock

          

Topco(1)

     203,750,000        61.74     203,750,000        66.37

Conyers Park existing public stockholders

     45,000,000        13.64               0.00

PIPE Shares — Non-affiliated holders

     50,000,000        15.15     50,000,000        16.29

PIPE Shares — Advantage Sponsors or their affiliates and Sponsor

     20,000,000        6.06     41,987,300        13.68

Founder Shares — Sponsor and current Conyers Park directors(2)

     11,250,000        3.41     11,250,000        3.66
  

 

 

    

 

 

   

 

 

    

 

 

 

Total shares outstanding(1)(2)(3)

     330,000,000        100.00     306,987,300        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) 

Excludes the 5,000,000 Performance Shares to be issued to Topco under the Merger Agreement, which will remain subject to vesting upon satisfaction of a market performance condition after the Closing, and until vesting Topco will not be able to vote or sell such shares.

(2)

Includes 100,000 shares of Class B common stock held by current members of the Conyers Park board of directors.

(3) 

Excludes the outstanding 18,583,333 warrants to purchase Class A common stock, as such securities are not exercisable until 30 days after the Closing.

Matters Being Voted On

The stockholders of Conyers Park will be asked to consider and vote on the following proposals at the special meeting:

1. a proposal to approve the business combination described in this proxy statement, including (a) adopting the Merger Agreement and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement. Please see the section entitled “Proposal No. 1The Business Combination Proposal” for additional information;

2. a proposal to approve and adopt the second amended and restated certificate of incorporation of Conyers Park in the form attached hereto as Annex B. Please see the section entitled “Proposal No. 2The Charter Proposal” for additional information;

3. a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the second amended and restated certificate of incorporation, presented separately in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3The Governance Proposal” for additional information;



 

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4. a proposal to approve and adopt the Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4The Incentive Plan Proposal” for additional information;

5. a proposal to approve and adopt the Employee Purchase Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 5The Employee Purchase Plan Proposal” for additional information;

6. a proposal to approve, for purposes of complying with the applicable provisions of NASDAQ Listing Rule 5635, the issuance of more than 20% of Conyers Park’s issued and outstanding shares of common stock in connection with the business combination, including, without limitation, the PIPE Investment. Please see the section entitled “Proposal No. 6The NASDAQ Proposal” for additional information; and

7. a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal or the NASDAQ proposal. Please see the section entitled “Proposal No. 7The Adjournment Proposal” for additional information.

Date, Time and Place of Special Meeting of Conyers Park’s Stockholders

The special meeting of stockholders of Conyers Park will be held at 10:00 a.m. Eastern Time, on October 27, 2020, at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022.

We intend to hold the special meeting in person. However, we are sensitive to the public health and travel concerns our stockholders may have and recommendations that public health officials may issue in light of the evolving coronavirus (COVID-19) situation. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website https://www.cstproxy.com/conyersparkiiacquisitioncorp/sm2020, and we encourage you to check this website prior to the meeting if you plan to attend.

At the special meeting, stockholders will be asked to consider and vote upon the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal the NASDAQ proposal and, if necessary, the adjournment proposal to permit further solicitation and vote of proxies if Conyers Park is not able to consummate the Transactions.

Voting Power; Record Date

Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of Conyers Park Common Stock at the close of business on October 6, 2020, which is the record date for the special meeting. Stockholders will have one vote for each share of Conyers Park Common Stock owned at the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. Conyers Park warrants do not have voting rights. On the record date, there were 56,250,000 shares of Conyers Park Common Stock outstanding, of which 45,000,000 were public shares with the rest being held by the Sponsor and certain Insiders. All holders of shares of Conyers Park Class A common stock and Conyers Park Class B common stock will vote together as a single class, with each share entitling the holder to one vote.



 

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Quorum and Vote of Conyers Park Stockholders

A quorum of Conyers Park stockholders is necessary to hold a valid meeting. A quorum will be present at the Conyers Park special meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Proxies that are marked “ABSTAIN” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting.

The Sponsor and certain Insiders own of record and are entitled to vote approximately 20% of the outstanding shares of Conyers Park Common Stock as of the record date. Such shares, as well as any shares of common stock acquired in the aftermarket by the Sponsor, will be voted in favor of the proposals presented at the special meeting.

The proposals presented at the special meeting will require the following votes:

 

   

the approval of each of the business combination proposal, the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the employee purchase plan proposal the NASDAQ proposal and the adjournment proposal require the affirmative vote of a majority of the votes cast by holders of Conyers Park’s outstanding shares of common stock represented at the special meeting by attendance in person or by proxy and entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Conyers Park stockholders’ failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal the NASDAQ proposal and the adjournment proposal will have no effect on such proposals; and

 

   

the approval of the charter proposal requires the affirmative vote of holders of a majority of Conyers Park’s outstanding shares of common stock entitled to vote thereon at the special meeting. Accordingly, if a valid quorum is established, a Conyers Park stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “AGAINST” such proposal.

Abstentions will have the same effect as a vote “AGAINST” the charter proposal, but will have no effect on the other proposals.

Consummation of the Transactions is conditioned on the approval of each of the business combination proposal, the charter proposal, the incentive plan proposal, the employee purchase plan proposal and the NASDAQ proposal. If any of those proposals are not approved, we will not consummate the Transactions.

Redemption Rights

Pursuant to Conyers Park’s current certificate of incorporation, a holder of public shares may demand that Conyers Park redeem such shares for cash if the business combination is consummated. Holders of public shares will be entitled to receive cash for these shares only if they demand that Conyers Park redeem their shares for cash no later than the second business day prior to the originally scheduled vote on the business combination proposal by delivering their stock to Conyers Park’s transfer agent prior to the vote at the meeting. The redemption rights include the requirement that a holder must identify himself, herself or itself in writing as a beneficial holder and provide his, her or its legal name, phone number and address to the transfer agent in order to validly redeem his, her or its shares. If the business combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption, Conyers Park will redeem each public share for a full pro rata portion of the trust account, calculated as of two business days prior to the consummation of the business combination. As of October 6, 2020, the record date for the meeting, this would amount to approximately $10.08 per share. If a holder of public shares exercises its redemption rights, then it will be



 

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exchanging its shares of Conyers Park Class A common stock for cash and will no longer own the shares. Please see the section entitled “Special Meeting of Conyers Park StockholdersRedemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your shares for cash.

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 10% of the public shares. Accordingly, all public shares in excess of 10% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or was a “group,” will not be redeemed for cash.

The business combination will not be consummated if Conyers Park has net tangible assets of less than $5,000,001 after taking into account holders of public shares that have properly demanded redemption of their shares for cash.

Holders of Conyers Park warrants will not have redemption rights with respect to such securities.

Appraisal Rights

Conyers Park stockholders, Conyers Park unitholders and Conyers Park warrant holders do not have appraisal rights in connection with the Transactions under the DGCL.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. Conyers Park has engaged Morrow Sodali LLC (“Morrow”) to assist in the solicitation of proxies. If a stockholder grants a proxy, it may still vote its shares during the meeting if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of Conyers Park StockholdersRevoking Your Proxy.”

Interests of Certain Persons in the Business Combination

In considering the recommendation of the Conyers Park Board to vote in favor of approval of the business combination proposal and the other proposals, stockholders should keep in mind that the Sponsor and the Insiders have interests in such proposals that are different from, or in addition to, those of Conyers Park stockholders generally. In particular:

 

   

If the Transactions or another business combination are not consummated by July 22, 2021, Conyers Park will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the Conyers Park Board, dissolving and liquidating. In such event, the 11,250,000 initial shares held by the Sponsor and Insiders would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $113,287,500 based upon the closing price of $10.07 per share on the NASDAQ on October 6, 2020, the record date for the special meeting.

 

   

The Sponsor purchased an aggregate of 7,333,333 private placement warrants from Conyers Park for an aggregate purchase price of $11,000,000 (or $1.50 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the Conyers Park IPO. A portion of the proceeds Conyers Park received from these purchases were placed in the trust account. Such warrants had an aggregate market value of $10,339,999.50 based upon the closing price of $1.41 per warrant on the NASDAQ on October 6, 2020, the record date for the special meeting. The private placement warrants will become worthless if Conyers Park does not consummate a business combination by July 22, 2021.



 

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James M. Kilts, David J. West, Brian K. Ratzan and Ronald E. Blaylock, current directors of Conyers Park, will become directors of New Advantage after the closing of the Transactions. As such, in the future each may receive any cash fees, stock options or stock awards that the post-combination board of directors determines to pay to its executive and non-executive directors.

 

   

If Conyers Park is unable to complete a business combination within the completion window, the Sponsor will be personally liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Conyers Park for services rendered or contracted for or products sold to Conyers Park. If Conyers Park consummates a business combination, on the other hand, Conyers Park will be liable for all such claims.

 

   

Conyers Park’s officers and directors, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on Conyers Park’s behalf, such as identifying and investigating possible business targets and business combinations. However, if Conyers Park fails to consummate a business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, Conyers Park may not be able to reimburse these expenses if the Transactions or another business combination, are not completed within the completion window.

 

   

Conyers Park will pay Centerview Partners LLC a transaction fee, in an amount up to $10 million, which shall be conditioned upon the completion of the Transactions and such engagement shall be terminated in full at such time. Certain of our directors and officers are partners at Centerview Capital Consumer, which is associated with Centerview Partners, and certain partners of Centerview Partners are partners (either directly or indirectly) in the ultimate general partner and the manager of Centerview Capital Consumer’s investment funds, and serve on Centerview Capital Consumer’s investment committee.

 

   

The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

 

   

Certain of our officers and directors are associated with Centerview Capital, L.P. and Centerview Employees, L.P., which have an aggregate 2.5% equity stake in Topco.

Board of Directors following the Business Combination

Upon consummation of the Transactions, the Conyers Park Board anticipates each Class I director having a term that expires immediately following Conyers Park’s annual meeting of stockholders in 2021, each Class II director having a term that expires immediately following Conyers Park’s annual meeting of stockholders in 2022 and each Class III director having a term that expires immediately following Conyers Park’s annual meeting of stockholders in 2023, or in each case until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death.

James M. Kilts, David J. West, Brian K. Ratzan and Ronald E. Blaylock, current directors of Conyers Park, have each been nominated to serve as directors of New Advantage upon completion of the Transactions.

Please see the section entitled “Management After the Business Combination” for additional information.

Recommendation to Stockholders

The Conyers Park Board believes that the business combination proposal and the other proposals to be presented at the special meeting are fair to and in the best interest of Conyers Park’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the NASDAQ proposal and “FOR” the adjournment proposal, if presented.



 

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When you consider the Conyers Park Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the business combination that are different from, or in addition to, the interests of Conyers Park stockholders generally. Please see the section entitled “Proposal No. 1The Business Combination ProposalInterests of Certain Persons in the Business Combination” for additional information. The Conyers Park Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Conyers Park stockholders that they vote “FOR” the proposals presented at the special meeting.

Conditions to the Closing of the Business Combination

General Conditions

Consummation of the Transactions is conditioned on the approval of the business combination proposal, the charter proposal, the incentive plan proposal, the employee purchase plan proposal and the NASDAQ proposal, as described in this proxy statement.

In addition, the consummation of the Transactions contemplated by the Merger Agreement is conditioned upon, among other things:

 

   

the early termination or expiration of the waiting period under the HSR Act;

 

   

no order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any governmental authority, and no statute, rule or regulation that is in effect and enjoins, prohibits or makes illegal the consummation of the Transactions;

 

   

Conyers Park having at least $5,000,001 of net tangible assets immediately after the closing of the Transactions contemplated by the Merger Agreement (including the PIPE Investment);

 

   

there being at least $1.15 billion in Available Closing Conyers Park Cash; and

 

   

the consummation of the Debt Financing prior to or concurrently with the closing.

Conyers Park’s Conditions to Closing

The obligations of Conyers Park and Merger Sub to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

 

   

the accuracy of the representations and warranties of Advantage (subject to customary bring-down standards); and

 

   

the covenants of Advantage and Topco having been performed in all material respects;

 

   

the occurrence of no Material Adverse Effect (as defined in the Merger Agreement); and

 

   

the delivery by Advantage to Conyers Park of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the Closing, as well as the performance by such party of the covenants and agreements contained in the Merger Agreement required to be complied with by such party prior to the Closing.

Advantage’s Conditions to Closing

The obligations of Advantage to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

 

   

the accuracy of the representations and warranties of Conyers Park and Merger Sub (subject to customary bring-down standards);



 

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the covenants of Conyers Park and Merger Sub having been performed in all material respects;

 

   

the delivery by Conyers Park to Advantage of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the Closing, as well as the performance by such party of the covenants and agreements contained in the Merger Agreement required to be complied with by such party prior to the Closing; and

 

   

the covenants of the Sponsor required under the Sponsor Agreement having been performed in all material respects.

Tax Consequences of the Business Combination and the Exercise of Redemption Rights

For a description of certain U.S. federal income tax consequences of the business combination and the exercise of redemption rights, please see the information set forth in “Proposal No. 1The Business Combination ProposalCertain Material U.S. Federal Income Tax Consequences of the Business Combination and the Exercise of Redemption Rights.

Anticipated Accounting Treatment

The Merger will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Conyers Park has been treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the current stockholder of Advantage, Topco, having a relative majority of the voting power of the combined entity, the operations of Advantage prior to the Merger comprising the only ongoing operations of the combined entity, and senior management of Advantage comprising the senior management of the combined entity. Accordingly, for accounting purposes, the financial statements of the combined entity will represent a continuation of the financial statements of Advantage with the acquisition being treated as the equivalent of Advantage issuing stock for the net assets of Conyers Park, accompanied by a recapitalization. The net assets of Conyers Park will be stated at historical cost, with no goodwill or other intangible assets recorded.

Regulatory Matters

Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission (the “FTC”), certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (the “Antitrust Division”) and the FTC and certain waiting period requirements have been satisfied. The Transactions are subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the filing of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted. If the FTC or the Antitrust Division issues a Second Request within the initial 30-day waiting period, the waiting period with respect to the Transactions will be extended for an additional 30-day period, which will begin on the date on which the filing parties each certify compliance with the Second Request. Complying with a Second Request can take a significant period of time. On September 18, 2020, Conyers Park and Topco filed the required forms under the HSR Act with the Antitrust Division and the FTC. Conyers Park and Topco received early termination of the HSR waiting period on September 30, 2020.

At any time before or after consummation of the Transactions, notwithstanding termination of the waiting period under the HSR Act, the applicable competition authorities could take such action under applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transactions. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. There is no assurance that the Antitrust Division, the FTC, any state attorney



 

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general or any other government authority will not attempt to challenge the Transactions on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result.

Neither Conyers Park nor Advantage is aware of any material regulatory approvals or actions that are required for completion of the Transactions other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

Risk Factors

In evaluating the proposals to be presented at the special meeting, you should carefully read this proxy statement and especially consider the factors discussed in the section entitled “Risk Factors.”

Business of Advantage

Except where noted or the context otherwise requires, as used in this subsection, the terms “we,” “us,” “our,” “our company” and “our business” refer to Advantage and its consolidated subsidiaries prior to the consummation of the business combination, and New Advantage and its consolidated subsidiaries following the consummation of the business combination.

Our Company

We are a leading business solutions provider to consumer goods manufacturers and retailers. Our customizable suite of technology-enabled sales and marketing solutions is designed to help manufacturers and retailers across a broad range of channels drive consumer demand, increase sales, and achieve operating efficiencies. Through our sales segment, we serve as a critical link between consumer goods manufacturers and their retailer partners. Our sales associates prepare and present to retailers a business case to increase distribution of manufacturers’ products and optimize how they are displayed, priced, and promoted both in-store and online. We also make in-store visits to ensure such products are adequately stocked and properly displayed. Through our marketing segment, we help brands and retailers reach consumers through two main platforms. The first is our retail experiential business, also known as sampling or demo, where we manage highly customized and deeply embedded large scale sampling programs (both in-store and online) with multi-decade relationships for leading retailers. These programs are mission-critical platforms for brands and retailers to drive sales, promote loyalty and build trial. The second is our collection of specialized agency businesses where we provide private label services to retailers and develop granular marketing programs for brands and retailers that are designed to influence shoppers on their paths to, and at the point of, purchase using our proprietary insights on shopper behavior, analytics, brand knowledge, and understanding of manufacturer and retailer strategies. In 2019, we provided services to over 3,500 manufacturers, and provided services for products located at more than 200,000 retail locations.

Our Sales Services

Our sales segment, which generated approximately 52% of our total revenues for the year ended December 31, 2019 and approximately 64% of our total revenues in the six months ended June 30, 2020, includes the following services:

Brand-Centric Services

 

   

Headquarter Relationship Management. We act as a representative of our consumer goods manufacturer clients and facilitate relationships with retailers across a range of matters, including



 

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business development and sales planning efforts. We prepare customized, data-driven business plans on behalf of our manufacturer clients and present a business case to increase distribution of their products, and optimize the shelf placement, pricing, and promotion of their products, to our extensive network of industry contacts spanning retailer buying organizations and senior executive ranks.

 

   

Analytics, Insights, and Intelligence. To support our sales efforts, we field a team of over 400 analytics professionals who provide category and space management services. These professionals analyze consumer purchase and retailer data to identify opportunities to increase the sales of our clients’ products and categories.

 

   

Administration. Our associates handle key back-office functions such as receiving and processing purchase orders. Our team also manages trade promotion programs executed between manufacturers and retailers.

 

   

Brand-Centric Merchandising. We deploy teams in retail locations to support manufacturers’ in-store sales strategies. Our associates conduct both cyclical and ad hoc store visits to manage product availability and positioning, implement promotions, install point-of-purchase displays, and perform other value-added merchandising services.

Retailer-Centric Services

Over the past decade we have leveraged our strategic position with retailers to develop solutions that address their needs. Since December 2017, our suite of retailer-centric services has been enhanced by our strategic acquisition of Daymon which we refer to as the “Daymon Acquisition.” Our retailer-centric services include:

 

   

Retailer-Centric Merchandising. We serve select retailers as their exclusive provider, and other retailers as an authorized provider, of in-store merchandising or reset services. For some of our retailer clients, we perform other in-store services, such as compliance audits, data collection, and in-store product assembly and certain advisory services, such as analytics and planogram services intended to increase sales and optimize inventory and space management so that the retailer’s personnel can focus on interacting with and servicing its shoppers.

 

   

In-Store Media. We manage a wide variety of media, merchandising, and display platforms for retailers, including: multi-manufacturer circular programs; an in-store display platform for perishable brands with over 2,500 cooler units in high-traffic locations; and a network of advertisements on pedestals at the entrances and exits of major retailers.

In addition to our brand-centric and retailer-centric sales services, we have a portfolio of other broadly applicable offerings that are designed to grow sales and reduce costs for clients. These services include:

 

   

Digital Commerce. We offer technology and e-commerce solutions to both manufacturers and retailers. For example, we have built our e-commerce capabilities to be able to execute the same fundamental sales, merchandising and marketing activities we provide brands and retailers at physical retail locations online. Our comprehensive suite of digital commerce services includes: outsourced sales representation of consumer goods manufacturers to online retailers, trade marketing management, brand reputation management, and content creation, management, and syndication services. Additionally, we offer technology solutions that automate critical reporting and provide insights that allow consumer goods manufacturers to make revenue-optimizing decisions regarding operations and workflows.



 

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Our Marketing Services

Our marketing segment, which generated approximately 48% of our total revenues for the year ended December 31, 2019 and approximately 36% of our total revenues in the six months ended June 30, 2020, includes the following services:

Brand-Centric Services

 

   

Shopper and Consumer Marketing. For manufacturer clients, we analyze shopper behavior and apply our deep retailer knowledge and expertise to offer planning, execution, and measurement of insight-based, retailer-specific promotions that target a retailer’s specific shopper base to drive product sales. Manufacturers also hire us for national consumer promotions, which are designed to stimulate demand for, and awareness of, their products more broadly.

 

   

Brand Experiential. We design and execute brand experiences in retail and non-retail settings in order to help brands engage, educate, acquire, and retain consumers and impact purchase behavior. Our brand experiential solutions include large-scale festivals, lifestyle venues, pop-up-shops, mobile tours, as well as assisted sales programs whereby our associates act as extensions of client sales teams, educating consumers as well as store employees.

Retailer-Centric Services

 

   

Retail Experiential. We design and execute one-to-one engagement strategies in order to drive product trial and sales and help retailers differentiate their in-store experience and generate more loyalty from shoppers. This includes in-store sampling and demo programs with fully-scaled operations including staffing, training, field management, assembly, fulfillment, technology, and reporting. We deploy teams at each retailer that develop event concepts in conjunction with marketing, merchandising and store operations and then secure supplier support and funding for the programs. Our other retail experiential solutions include premium advisors who provide assistance in complex categories (such as beauty and adult beverages), virtual advisors who provide assistance via text messaging or web, and curated sampling boxes for online grocery pick-up and delivery orders. Retail experiential constitutes the largest service in the marketing segment, representing more than half of our retailer-centric and marketing revenues.

 

   

Private Label. We help maximize the market potential of private label portfolios by providing comprehensive private label strategy, development, and management services to retailers and private label manufacturers. By leveraging our analytical capabilities and expertise, we develop strategies and provide insights that help retailers establish and grow productive and profitable private label programs across new and existing product categories.

In addition to our brand-centric and retailer-centric marketing services, we have a portfolio of other broadly applicable offerings that are designed to engage consumers and enhance marketing efforts for clients. These services include:

 

   

Digital Marketing. Using advanced analytics, our digital marketing teams provide a wide range of services to clients, including: interactive design and development across mobile, tablet, and desktop platforms; application development; content management solutions; paid media, including search engine marketing, and programmatic and direct media; and social media development and management.

 

   

Digital Media and Advertising. We offer targeted media and advertising solutions powered by our proprietary data that deliver to curated, custom audiences from first- and third-party data sources. Our cross-screen advertising capabilities enable advertisers to target and engage with custom audience segments across devices via rich media, display, email, and value exchange ads.



 

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Our Clients

We serve leading manufacturers of both branded and private label products across a range of consumer product categories, including packaged foods, beverages, perishables, health and beauty care, and consumer electronics. We also maintain deep relationships with retailers across various channels, including traditional retail (which includes grocery, drug, mass, convenience, club, and natural/specialty), foodservice, and e-commerce.

Our clients vary in terms of size and growth profile, ranging from some of the world’s largest consumer goods manufacturers, including Mars, PepsiCo, and Smucker’s, to smaller regional players and emerging brands. While the majority of our client base has historically been consumer goods manufacturers, over the past ten years, and as a result of our acquisition of Daymon, we have increased our offerings to retailers, particularly in the areas of private label development, designing and managing in-store events platforms, retailer-centric merchandising, and other labor-based services, such as data collection, product assembly, new-store setups, and remodels. More recently, we have also begun to offer our marketing services beyond consumer goods manufacturing and retail, to industries such as automotive, entertainment, and travel.

We believe that our strategic insights, flexible, service-oriented approach, and superior execution have helped us cultivate long-standing relationships with our clients. We help our clients increase sales and reduce costs by leveraging our industry expertise, network of relationships, and scale to develop and execute strategies that fuel our clients’ growth and allow them to focus on their core competencies. For example, Dechert-Hampe & Company, or Dechert-Hampe, an independent consulting firm, estimated in a 2019 study that outsourcing direct retail coverage teams to a syndicated model may save manufacturers between 45% and 50%. That same study estimated that replacing a direct sales team with headquarter representation from an outsourcing partner may save manufacturers between 35% and 50%. We work closely with our clients to identify the combinations of services that best meet their sales and marketing objectives and strive to address the related challenges they face in a customized way.

Nine of our top 15 clients by revenues in 2019 have been clients for over ten years, with the remaining six clients being new business wins in the last ten years. From 2010 through 2019, we had an average revenue-weighted client retention rate of approximately 98%. We define average revenue-weighted client retention rate as prior year total revenues less annual revenues from lost clients in that period, divided by prior year total revenues. We believe this high level of retention demonstrates the value that we provide our clients through the deeply embedded and mission critical sales and marketing functions that we manage on our clients’ behalf as part of their coordinated go-to-market strategies.

As of June 30, 2020, we operated more than 100 offices, primarily in the United States. Our geographic footprint allows us to execute our strategies on a local, regional, or national level. As of June 30, 2020, we employed in excess of 58,000 associates who provide us with the resources and scale to provide broad-reaching and cost-efficient solutions to our clients. Many of our offices are strategically located near our manufacturer and retailer clients, with many of our associates working directly at manufacturers’ or retailers’ offices. This presence provides us with deeper insight into client strategies, systems, and operations and gives our associates more direct access to key decision makers, allowing them to deliver our value-enhancing services in a more tailored and effective manner. While the majority of our business is concentrated in the United States and Canada, we maintain a platform through our strategic international investments in select markets throughout Africa, Asia, Australia, Europe, and Latin America through which we can service the global needs of multinational manufacturers and retailers.

Our business has demonstrated an ability to consistently grow revenues and Adjusted EBITDA, over time and through economic cycles. In 2019, we generated $3.8 billion of revenues, $19.8 million of net loss and $504.0 million of Adjusted EBITDA. Our revenues and Adjusted EBITDA in 2019 reflect a compound annual



 

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growth rate, or “CAGR,” of 12.6% and 11.0%, respectively, since 2007 and our organic revenues in 2019 reflect a CAGR of 4.0% since 2008. See “Advantage’s Summary Historical Financial Information” for a reconciliation of Adjusted EBITDA to net (loss) income and “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of how we define and assess our organic revenues.

We believe that the consistency and resiliency of our business has been attributable to a variety of factors, including: the stability of the markets we serve since a significant portion of our revenues is tied to the sales of a broad group of non-discretionary consumer goods (including during the COVID-19 pandemic, during which certain governmental agencies designated many retailers as “essential businesses”); the diversity of the services we offer across a variety of distribution channels; and the nature of the services we provide to our clients. Additionally, our services-based operations provide us with a capital-efficient business model that requires limited investment in the form of capital expenditures and working capital. The consistency of our operating results as well as our strong cash flow profile has provided us with a high degree of financial flexibility, which has enabled us to strategically deploy capital to build our business over time.

Our Historical Financial Performance ($ in millions)

 

 

LOGO

 

*

Revenues and Adjusted EBITDA CAGRs calculated from 2007 to 2019. Organic revenues CAGR calculated from 2008 to 2019.

 

Note:

Revenues, net loss, and Adjusted EBITDA for the year ended December 31, 2010 presented above represent the mathematical addition of the audited results of a successor for the period from December 17, 2010 to December 31, 2010, and the audited results of a predecessor for the period from January 1, 2010 to December 16, 2010, following an acquisition of Advantage Sales & Marketing Inc. by AGS Topco Holdings, L.P. and its private equity sponsor, Apax Partners, on December 17, 2010, which we refer to as the 2010 Acquisition. Revenues, net loss, and Adjusted EBITDA for the year ended December 31, 2014 presented above represent the mathematical addition of the audited results of a successor for the period from July 26, 2014 to December 31, 2014, and the audited results of a predecessor for the period from January 1, 2014 to July 25, 2014, following an acquisition of Advantage Sales & Marketing Inc. by Topco on July 25, 2014, which we refer to as the 2014 Topco Acquisition.



 

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In the six months ended June 30, 2020, we generated $1.5 billion of revenues, a net loss of $59.5 million, $65.7 million of Adjusted Net Income, and $218.4 million of Adjusted EBITDA. See “— Advantage’s Summary Historical Financial Information” for a reconciliation of each of Adjusted EBITDA and Adjusted Net Income to net loss.

Our Market Opportunity

We compete in several large and consistently growing markets for outsourced business services targeting the sales, marketing, and technology needs of consumer goods manufacturers and retailers.

Dechert-Hampe estimated in 2019 that the market for the traditional outsourced sales services (excluding private label development services) offered through our sales segment in the United States was approximately $7.3 billion in 2018 and has grown at a CAGR of approximately 4.8% from 2013 through 2018. Historically, the outsourced sales services industry has grown consistently, largely driven by the steady expansion of the broader U.S. consumer goods market and the growth in penetration of outsourced services with consumer goods manufacturers. Over the past two decades, the industry has experienced meaningful consolidation. Today, the U.S. industry operates with three national firms, two of which, including us, have the most significant market share. Based on our 2018 U.S. sales services revenues and industry data provided by Dechert-Hampe in its 2019 study, we estimate that we account for approximately 20% of the sales services market (excluding private label development services) in the United States by revenues. Other than the three national firms, the industry remains highly fragmented, comprised of smaller independent agencies that offer services on a more regional level or are focused on a specific channel, such as foodservice, or specific service, such as merchandising projects and resets.

End markets for our solutions consist of a diversified group of large and emerging consumer goods manufacturers across mostly non-discretionary categories, such as packaged foods, beverage, and personal care, and a diversified group of leading retailers across traditional retail, foodservice, and e-commerce channels. These end markets have experienced relatively stable growth over time and across market cycles, as demonstrated by a CAGR of 2.8% between 2007 and 2018, with only one year of decline during the same period.

The market for our technology and digital commerce solutions offered in the sales and marketing segments has grown rapidly as manufacturers and retailers look to drive operational efficiencies through data analysis, and effectively distribute, manage and advertise products in the e-commerce channel. Dechert-Hampe estimated in 2019 that the market for the business intelligence technology solutions offered through our sales segment in the United States was approximately $32.6 billion in 2018 and was expected to continue to grow. Additionally, we believe we have an opportunity to increase our sales revenues in the growing e-commerce channel. Dechert-Hampe estimated that e-commerce consumer goods sales in the United States were approximately $43.4 billion in 2018, up from approximately $39.3 billion in 2017, an increase of 10%. We expect the market for technology and digital commerce solutions to continue to grow as these trends continue.

Dechert-Hampe estimated that the market for the experiential, shopper and consumer marketing services offered through our marketing segment in the United States was approximately $11.6 billion in 2017 and had grown at a CAGR of approximately 16% from 2012 to 2017. The market for these services has grown with increased manufacturer and retailer awareness and understanding of the greater effectiveness of properly targeted marketing strategies. These strategies aim to influence shoppers with meaningful messages and experiences along their paths to purchase, particularly while in-store and at the point-of-purchase. Dechert-Hampe estimated in its 2019 study that overall marketing spend in these service areas would continue to grow, primarily driven by manufacturers’ and retailers’ desire to influence shoppers to purchase products with memorable content and experiences. The industry for these services remains highly fragmented and consists of a large number of specialized and diversified agencies.

Dechert-Hampe estimated that the market for digital marketing solutions in the United States was approximately $21.3 billion in 2017 and had grown at a CAGR of approximately 25% from 2012 to 2017.



 

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Additionally, Dechert-Hampe estimated that the market for marketing data services in the United States was approximately $10.1 billion in 2017. The market for these solutions has grown with the increasing influence of digital marketing in consumers’ shopping routines, causing manufacturers and retailers to integrate digital, social, and mobile marketing techniques into their marketing plans. We expect the market for these solutions to continue to grow rapidly as manufacturers and retailers seek to create effective, integrated multi-channel marketing campaigns that deliver compelling content and experiences to influence shopper behavior across all mediums.

We believe that growth in the several markets in which we compete is driven by a number of prevailing industry trends:

 

   

Outsourced business services are in increasing demand as manufacturers and retailers continue to seek effective and cost-efficient operational solutions.

 

   

Small and mid-sized consumer brands are benefitting from increased consumer demand and require a deeper level of outsourced support for key sales and marketing functions.

 

   

Private label brands are of increasing importance to retailers seeking growth and profitability as well as increased customer loyalty.

 

   

The proliferation of e-commerce has driven retailers to pursue strategies to differentiate their in-store shopping experience.

 

   

The growth of e-commerce has also driven manufacturers and retailers to seek solutions that support the growth of their business in this channel.

Within this industry environment, we believe we are advantageously positioned because of our expertise, diverse and customizable suite of services, relationships, national footprint, and scale.

Our Competitive Strengths

We believe the following strengths differentiate us within our industry and have contributed to our sustained success:

Leading National Provider with Significant Scale and Infrastructure that Would be Difficult to Replicate

We are a leading national provider of technology-enabled sales and marketing services, as measured by revenues, in the markets in which we operate. With approximately 48,000 associates regularly providing services within retail locations and more than 4,000 associates working on behalf of manufacturers and retailers at or near their headquarters or regional buying offices, we are one of the largest national providers of sales and marketing services.

For example, in our marketing segment, we are the largest provider of experiential marketing services to retailers and consumer goods manufacturers. We believe this gives us an advantage over traditional marketing agencies in designing and executing coordinated, large-scale marketing programs in retail locations.

We have spent decades developing a reputation for providing high-quality service and superior execution, grounded in our data-driven insights. We believe that our scale provides us with significant competitive advantages by allowing us to differentiate the value of the services we provide by:

 

   

offering a broad suite of capabilities that enables us to create flexible, customizable, multi-service solutions that meet our clients’ evolving needs, from small regional businesses to large multinational corporations;



 

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combining the expertise, experience, and in-market presence necessary to deliver flexible, centrally coordinated, local, regional, or national execution of large and complex labor-based services;

 

   

building, training, and managing the deployment of our large workforce to serve our clients’ needs more efficiently;

 

   

leveraging the significant volume of products that we market on behalf of our clients and our proximity and connectivity to retailers and manufacturers to influence decision makers; and

 

   

investing in technology and data that enable our talented associates to better support our clients’ businesses.

Our scale affords us efficiencies to deliver solutions that are more effective and cost-efficient than those provided by smaller competitors or internal manufacturer and retailer teams, allowing us to grow our clients’ revenues while reducing their operating expenses. We believe our scale positions us to retain existing clients and win new business, which further increases our scale and associated competitive advantages.

Strong, Long-Term Relationships with Leading Manufacturers and Retailers

We maintain strategic relationships with a diversified base of over 3,500 consumer goods manufacturers and retailers, including iconic brands at manufacturers such as Mars, PepsiCo, and Smucker’s, and leading retailers.

We enjoy long-term, multi-service relationships with our largest clients. As of December 31, 2019, we had a tenure of over ten years with 9 of our top 15 clients by revenues, with the remaining six clients being new business wins in the last ten years. We believe that our clients view our relationships as long-term and strategic, which provides us with a stable and consistent revenue base due to mutually aligned incentives and a partnership dynamic. We also believe this high level of customer retention provides considerable predictability to our core revenue streams, supplying us with capital to invest in both organic and inorganic initiatives with attractive returns that build value for shareholders and clients by adding capabilities to our portfolio that better enable our teams to meet our clients’ evolving needs.

Strategic Intermediary Benefitting from Self-Reinforcing Network Effects

We occupy an important industry position where we serve as a strategic intermediary between consumer goods manufacturers and retailers — creating value for both parties. Due to the breadth and depth of our representation and relationships across key categories and departments, we are among the largest supplier partners to many retailers. Our size gives us access and influence with key decision makers that smaller agencies and clients often cannot secure on their own, which, in turn, helps us win additional representation. This self-reinforcing “network effect” has helped us become an important strategic partner to both manufacturers and retailers. We have focused on strengthening the value we can provide to our network by investing in technology and in-market talent that, through our proximity to manufacturers and retailers, gives us direct visibility into strategies and systems and better positions us to support manufacturers’ and retailers’ businesses.

Prudent Capital Allocator with Strong Acquisition and Integration Capabilities

We maintain a disciplined approach to capital allocation and have a history of acquiring businesses at what we believe are attractive relative valuation levels, achieving synergies, and meeting or exceeding our internal performance goals. Since January 2014, we have acquired 62 businesses, which have expanded our capabilities in digital and social marketing, extended our sales services into the e-commerce channel, enhanced our service offerings to retailers, and expanded our footprint into Europe and other international markets such as Africa, Asia, Australia, and Latin America through our acquisition of Daymon and strategic partnership with Smollan.



 

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Broad Suite of Complementary Services and Technology Solutions Tailored to Client Needs

Based on insight we have gained as a strategic intermediary between manufacturers and retailers, we have built what we believe to be a broad suite of technology-enabled services, allowing our associates to create coordinated, innovative, multi-service solutions designed to achieve our clients’ business objectives.

As our clients’ needs have evolved, we have responded by expanding into new services in order to more effectively serve clients. For example, in 2000, we expanded our offering from purely sales services to include marketing services, which leverage our expertise, network of relationships, data, insight, and technology to differentiate our marketing solutions. We began our marketing business after we observed the challenges our clients were experiencing while using traditional marketing agencies that were not effectively connecting brand marketing strategies, sales planning efforts, and retailer strategies. More recently, we have begun building a complementary suite of sellable technology and digital commerce solutions designed to address several major business drivers in our industry, including the continuous push for operational efficiency, e-commerce channel expansion, and the need to optimize online and in-store execution capabilities. In addition, in response to our retailer clients’ needs, we completed our acquisition of Daymon in December 2017 to enhance our portfolio of retailer-centric services, including private label development and management, merchandising, and experiential marketing services.

Differentiated and Proprietary Technology Infrastructure

Our proprietary technology infrastructure enables our associates to provide differentiated services that help us grow manufacturers’ and retailers’ businesses by leveraging data-driven insights to develop winning sales and marketing strategies and enable more effective and more efficient execution in-store and online.

Our technology supports our associates across a range of functions, and includes a proprietary analytics software suite that helps our associates analyze and apply vast amounts of industry data in the selling process and automate reporting. Our business and category managers use this software to efficiently develop insight-based portfolio strategies and sales plans for our clients.

Furthermore, our retail services associates use tablets with proprietary software that helps them optimize their workflow by routing and prioritizing store-level activities. This technology also enables our associates to utilize proprietary applications to perform functions such as recommending promotional display programs to store managers and illustrating potential store-level sales impact of their recommendations while in store.

Talented Associates and Performance-Based Culture

We believe that our talented associates and performance-based culture are important competitive advantages. We have a results-driven team of leaders with significant experience in the consumer, retail, sales, marketing, and technology industries.

We have made significant investments in training and leadership programs to ensure that we remain an attractive career choice for associates at every level. Our associate programs are complemented by our performance-based culture that we believe differentiates us from our competitors. Our culture is built on both internal and external transparency and accountability for results. We set clear objectives with our associates, analyze score-card performance, and reward associates who outperform. We strive to encourage and empower our associates to be proactive, creative, and entrepreneurial in providing solutions for our clients. We believe our encouragement and empowerment have contributed to the service innovation that has fueled our growth, and that our commitment to results and continuous improvement has produced long-term relationships with our clients that typically increase in scale and scope over time.



 

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Our Growth Strategies

Our competitive strengths and industry leadership support our favorable economic model and enable us to pursue numerous growth opportunities. We intend to create value by continuing to invest in organic and inorganic growth initiatives in pursuit of the following key strategies:

Grow Our Client Relationships

Expand Existing Client Relationships

We have cultivated long-term, multi-service relationships across a diverse set of manufacturers and retailers. As we have broadened our service offerings, we have succeeded in expanding our client relationships. We believe significant opportunities remain to increase service penetration within our existing client base across our technology-enabled sales and marketing solutions. The long-term nature of our client relationships allows us to identify expansion opportunities and positions us to actively develop customized service arrangements to broaden the scope of those relationships.

Continue to Win New Clients

We have a strong track record of securing business from new clients. From 2012 through 2019, we won approximately 100 new client accounts and experiential marketing platforms with annual revenues between $0.5 million and $45.0 million per account. In aggregate, the estimated annualized revenues resulting from these wins was approximately $630.2 million. We estimate the annualized revenues based on specified contract value (e.g., a monthly retainer or fixed project fee) or a client’s historical sales (in the case of a commission-based arrangement). Of those accounts, approximately 33% were attributed to increased outsourcing among consumer goods manufacturers and retailers, and approximately 67% were attributed to consumer goods manufacturers and retailers switching from competitors. Moreover, as we expand the industries we serve to areas such as healthcare, financial services, and automotive, and as our addressable market continues to grow, we believe that we will continue to succeed in generating new business.

Pursue Channel Expansion and New Industry Opportunities

We believe there are significant growth opportunities within the e-commerce channel. In 2019, Dechert-Hampe estimated that the total United States e-commerce market was approximately $505 billion in 2018 and was expected to reach approximately $735 billion by 2023, representing a 7.8% CAGR, as online category penetration expands, mobile sales grow and order values increase. While categories such as books and music are already highly penetrated in the e-commerce channel, the grocery and personal care categories, which comprise the majority of the products we represent, remained relatively underpenetrated at approximately 8% penetration according to the 2019 Dechert-Hampe study. However, Dechert-Hampe estimated in 2019 that growth in e-commerce sales in both the online grocery and personal care categories were projected to accelerate through 2022 to approximately 20% and 10.5% per annum, respectively, with online grocery reaching approximately $35 billion domestically, by 2022. We believe changes in consumer shopping behavior during the COVID-19 pandemic may accelerate shoppers’ adoption of e-commerce platforms and we believe that our existing competencies and capabilities position us well to succeed as the channel becomes more meaningful for our clients and the categories we represent. Many of the core competencies that allow us to add value for clients in traditional retail channels are as relevant to effective sales and marketing in the e-commerce channel as they are to the brick-and-mortar retail channels. In addition, we have added talent and capabilities dedicated to selling, marketing and merchandising clients’ products in the e-commerce channel. Our e-commerce agency acquisitions have strengthened our relationships and capabilities in the channel, adding expertise in important areas such as sales and marketing plan development, headquarter and third-party sales, specialized search engine optimization, online review management, search engine marketing, enhanced content creation and promotion execution.



 

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Outside of the consumer goods manufacturing industry and traditional retail channels, we believe there is an opportunity to market our services to companies in other industries, such as automotive, education, entertainment, healthcare, specialty pet and travel.

Continue to Enhance Our Solutions and Expand Into Logical Adjacencies

We believe that we have a significant opportunity to leverage our position as a strategic intermediary between manufacturers and retailers to develop new and innovative outsourced solutions.

Since 2014 we have focused on developing technology and digital commerce solutions to help consumer goods manufacturers and retailers find operational efficiencies; create, produce, and distribute compelling content; and successfully market their products in an increasingly omni-channel environment. We believe there is an opportunity for further development in this area.

We also believe there is an opportunity to develop new value-added marketing services. The marketing capabilities we have added in recent years include a paid search marketer, two digital marketing agencies, and a dedicated media solutions team specializing in targeted mobile advertising. As marketing spend migrates away from television, where traditional advertising agencies have historically held competitive advantages, and toward the disciplines where we have built our reputation and can differentiate our services through our understanding and connectivity to retail (i.e., promotional, shopper, experiential and digital marketing), we believe we are well-positioned to add value for clients with new demand creation services such as brand identity, content, and packaging design. Moreover, the growing relevance of smaller, emerging brands has created a sizeable market opportunity for us to apply the full array of our capabilities.

Pursue Additional Strategic and Financially Attractive Acquisitions

We have a track record of successfully identifying, acquiring, and integrating businesses that expand our solutions offering, sales channels, client relationships, and geographic markets, while achieving synergies and generating attractive returns that are well in excess of our cost of capital. Using our disciplined approach for screening and evaluating potential opportunities, we intend to continue to seek strategically and financially attractive acquisition targets that provide us with new capabilities.

Further Develop Our International Platform

We believe that growing our international presence will allow us to offer integrated outsourcing solutions for multinational manufacturers and retailers and to provide those clients a single strategic partner with an understanding of their global businesses. We have made strategic minority investments in Smollan and established a joint venture with Smollan in Europe. While the majority of our business is concentrated in the United States and Canada, these investments and our acquisition of Daymon have provided us with growth opportunities in several markets throughout Africa, Asia, Australia, Europe, and Latin America. We plan to further expand our global presence through both strategic investments and acquisitions. As we deepen our penetration of these existing markets and enter new geographies, we expect to focus on acquiring knowledge of local market dynamics while also leveraging our deep understanding of how to create a consolidated platform to service the outsourcing needs of large clients.

Dechert-Hampe estimated in 2019 that the market for addressable sales segment services and the in-store activation portion of our marketing services in the international markets where we operate was approximately $6.7 billion in 2018 and had grown at a CAGR of 2.7% over the past five years (excluding exchange rate effects). They projected in 2019 that these markets would grow, in aggregate, at approximately 3% annually over the next five years, driven by gross domestic product growth and the maturation of retail business models in certain geographies.



 

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Utilize Technology and Scale to Drive Efficiencies in Operations

We believe our scale and continued investment in technology enable us to achieve operational excellence and capture productivity improvements. We consider technological innovation to be a critical component of our strategy, allowing us to provide superior execution at scale and deliver data-driven insights to grow our clients’ businesses. We believe that with our talent, entrepreneurial culture, and willingness to invest in our future, we are positioned to continue to develop new technologies that will differentiate our service offering from our competitors.

Corporate Information

We are a corporation initially formed under the laws of the State of Delaware in June 2014 solely for the purpose of the 2014 Topco Acquisition. On July 25, 2014, Advantage acquired (the “2014 Topco Acquisition”) Advantage Sales & Marketing Inc. from AGS Topco Holdings, L.P. and its private equity sponsor, Apax Partners. As a result of the 2014 Topco Acquisition, Advantage Sales & Marketing Inc. became a wholly owned indirect subsidiary of Advantage, which prior to the business combination is a wholly owned direct subsidiary of Topco. From an accounting perspective, the 2014 Topco Acquisition represented a recapitalization of our equity interests by equity funds affiliated with or advised by CVC Capital Partners, Leonard Green & Partners, and Juggernaut Capital Partners. Accordingly, the assets and liabilities acquired were recorded at fair value for the interests acquired by our new investors and the results of our operations prior to the 2014 Topco Acquisition have been presented as our Predecessor period. The units of Topco are held by such equity funds, as well as by certain entities that are or are controlled by equity funds affiliated with or advised by Centerview Capital, by members of Advantage’s management and by the primary prior equity holders of Daymon (including an equity fund advised by Bain Capital, and Yonghui Investment Limited, each of which acquired units of Topco as consideration for the Daymon Acquisition). Through its ownership of our common stock, Topco controls us, and after the consummation of the Transactions, will, in combination with the Sponsor, continue to control us.

Our corporate headquarters are located at 18100 Von Karman Avenue, Suite 1000, Irvine, California 92612. Our telephone number is (949) 797-2900. Our principal website address is www.advantagesolutions.net. The information on any of our websites is deemed not to be incorporated in this proxy statement or to be part of this proxy statement.

Trademarks

This proxy statement includes our trademarks, trade names, and service marks, which are protected under applicable intellectual property laws and are our property. This proxy statement also contains trademarks, trade names, and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this proxy statement may appear without the ®, TM, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names, and service marks. We do not intend our use or display of other parties’ trademarks, trade names, or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

Market Data

Information contained in this proxy statement concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources (including industry publications, surveys, and forecasts, as well as a market study prepared for us by Dechert-Hampe in 2019), and management estimates. Management estimates are derived from publicly available



 

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information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets which we believe to be reasonable. We are responsible for all of the disclosures in this proxy statement, and although we believe the data from these third-party sources is reliable, we have not independently verified any third-party information. In addition, projections, assumptions, and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

Estimates of industry and market data by Dechert-Hampe referred to herein are derived from a study prepared for us by Dechert-Hampe and represent research opinions of Dechert-Hampe. The estimates of Dechert-Hampe referred to herein are based on historical data that speaks as of May 31, 2019 or earlier (and not as of the date of this proxy statement). The markets that are the subject of the Dechert-Hampe market study may have changed significantly since May 31, 2019 and earlier time periods as a result of the passage of time and the COVID-19 pandemic.

Non-GAAP Financial Measures

Certain financial measures presented in this proxy statement, such as Adjusted EBITDA, Adjusted EBITDA by segment and Adjusted Net Income are supplemental measures of our operating performance that are not recognized under GAAP. We define these terms as follows:

 

   

Adjusted EBITDA” means net (loss) income before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) private equity sponsors’ management fees and equity-based compensation expense, (vii) fair value adjustments of contingent consideration related to acquisitions, (viii) acquisition-related expenses, (ix) costs associated with COVID-19, net of benefits received, (x) EBITDA for economic interests in investments, (xi) restructuring expenses, (xii) litigation expenses, (xiii) (Recovery from) loss on Take 5, (xiv) costs associated with the Take 5 Matter, and (xv) other adjustments that management believes are helpful in evaluating our operating performance.

 

   

Adjusted EBITDA by segment” means operating income (loss) by segment before (i) depreciation, (ii) impairment of goodwill and indefinite-lived assets, (iii) amortization of intangible assets, (iv) private equity sponsors’ management fees and equity-based compensation expense, (v) fair value adjustments of contingent consideration related to acquisitions, (vi) acquisition-related expenses, (vii) costs associated with COVID-19, net of benefits received, (viii) EBITDA for economic interests in investments, (ix) restructuring expenses, (x) litigation expenses, (xi) (Recovery from) loss on Take 5, (xii) costs associated with the Take 5 Matter, and (xiii) other adjustments that management believes are helpful in evaluating our operating performance.

 

   

Adjusted Net Income” means net (loss) income before (i) impairment of goodwill and indefinite-lived assets, (ii) private equity sponsors’ management fees and equity-based compensation expense, (iii) fair value adjustments of contingent consideration related to acquisitions, (iv) acquisition-related expenses, (v) restructuring expenses, (vi) litigation expenses, (vii) costs associated with COVID-19, net of benefits received, (viii) amortization of intangible assets, (ix) (Recovery from) loss on Take 5, (x) costs associated with the Take 5 Matter, (xi) net income attributable to noncontrolling interests, (xii) impact of changes in U.S. federal tax laws, (xiii) other adjustments that management believes are helpful in evaluating our operating performance, and (xiv) related tax adjustments.

The foregoing are included in this proxy statement because our management uses them as key operating measures to assess our financial performance. These measures adjust for items that we believe do not reflect the



 

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ongoing operating performance of our business, such as certain noncash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA.

Adjusted EBITDA, Adjusted EBITDA by segment and Adjusted Net Income may also be used by analysts, investors, and other interested parties to evaluate companies in our industry. Our measures of Adjusted EBITDA, Adjusted EBITDA by segment and Adjusted Net Income are not necessarily comparable to similarly titled captions of other companies due to different methods of calculation. See “— Advantage’s Summary Historical Financial Data” for a reconciliation of each of these metrics to the most comparable GAAP metric.

The foregoing are not GAAP measures of our financial performance and should not be considered as alternatives to net income (loss) as a measure of financial performance, or any other performance measure derived in accordance with GAAP. Adjusted EBITDA, Adjusted EBITDA by segment and Adjusted Net Income should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA, Adjusted EBITDA by segment and Adjusted Net Income are not intended to be measures of free cash flow for management’s discretionary use, as they do not reflect tax payments, debt service requirements, capital expenditures, and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. We compensate for these limitations by using the non-GAAP financial measures noted above to supplement our most directly comparable measure presented on a GAAP basis.



 

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CONYERS PARK’S SUMMARY HISTORICAL FINANCIAL INFORMATION

Conyers Park is providing the following summary historical financial information to assist you in your analysis of the financial aspects of the Transactions.

Conyers Park’s balance sheet data as of December 31, 2019 and statement of operations data for the period from May 2, 2019 (inception) through December 31, 2019 are derived from Conyers Park’s audited financial statements, included elsewhere in this proxy statement. Such data as of and for the period ended June 30, 2020 are derived from Conyers Park’s unaudited financial statements, included elsewhere in this proxy statement.

The information is only a summary and should be read in conjunction with Conyers Park’s financial statements and related notes and “Other Information Related to Conyers Park” and “Conyers Park’s Managements Discussion and Analysis of Financial Condition and Results of Operations.” The historical results included below and elsewhere in this proxy statement are not indicative of the future performance of Conyers Park. The information is only a summary and should be read in conjunction with Conyers Park’s financial statements and related notes and “Other Information Related to Conyers Park” and “Conyers Park’s Managements Discussion and Analysis of Financial Condition and Results of Operations.” The historical results, and the results for any interim period included below and elsewhere in this proxy statement are not indicative of the future performance of Conyers Park.

Consolidated Statements of Operations Data

 

    For the Six
Months Ended
June 30, 2020
    For the Period
from May 2, 2019
(inception) Through
June 30, 2019
    From May 2, 2019
(inception) through
December 31, 2019
 

General and administrative expenses

  $ 322,037     $ 2,000     $ 279,580  

State franchise taxes

    100,000       —         100,000  
 

 

 

   

 

 

   

 

 

 

Loss from operations

    (422,037     (2,000     (379,580

Interest income earned on cash equivalents and marketable securities held in trust account

    1,670,961       —         3,579,393  
 

 

 

   

 

 

   

 

 

 

Income before income tax expense

    1,248,924       (2,000     3,199,813  

Income tax expense

    329,902       —         730,672  
 

 

 

   

 

 

   

 

 

 

Net income / (loss)

  $ 919,022     $ (2,000   $ 2,469,141  
 

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding of Class A common stock

    45,000,000       —         45,000,000  
 

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, Class A

  $ 0.02     $ 0.00     $ 0.05  
 

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding of Class B common stock(1)

    11,250,000       11,250,000       11,250,000  
 

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, Class B

  $ 0.00     $ (0.00   $ 0.00  
 

 

 

   

 

 

   

 

 

 

 

(1)

For the 2019 period, this number excludes an aggregate of up to 1,500,000 shares of Class B common stock that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters. The underwriters exercised their over-allotment option on July 22, 2019 in part.



 

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Balance Sheet Data

 

     June 30, 2020      December 31, 2019  

Balance Sheet Data:

     

Total assets

   $ 455,344,127      $ 454,109,579  

Total current liabilities

     543,438        227,912  

Deferred underwriting compensation

     15,750,000        15,750,000  

Total liabilities

     16,293,438        15,977,912  

Working capital

     500,322        1,065,142  

Class A common stock, $0.0001 par value; 500,000,000 shares authorized; 1,594,932 and 1,686,834 shares issued and outstanding (excluding 43,405,068 and 43,313,166 shares subject to possible redemption) at June 30, 2020 and December 31, 2019, respectively

     159        169  

Class B common stock, $0.0001 par value; 50,000,000 shares authorized; 11,250,000 shares issued and outstanding

     1,125        1,125  

Total stockholders’ equity

     5,000,009        5,000,007  


 

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ADVANTAGE’S SUMMARY HISTORICAL FINANCIAL INFORMATION

Unless otherwise indicated or the context otherwise requires, references in this section to the company, “we,” “us,” or “our” and other similar terms refer to Advantage and its consolidated subsidiaries prior to the consummation of the business combination.

The following table sets forth our summary historical financial information for the periods and dates indicated. Our summary historical financial information as of and for the years ended December 31, 2019, 2018 and 2017 and as of June 30, 2020 and for the six-month periods ended June 30, 2020 and 2019 has been prepared in accordance with GAAP. The balance sheet data as of December 31, 2019 and 2018 and the statements of comprehensive (loss) income for the years ended December 31, 2019, 2018 and 2017 have been derived from our audited consolidated financial statements included elsewhere in this proxy statement. The balance sheet data as of December 31, 2017 have been derived from our audited consolidated financial statements not included in this proxy statement. The balance sheet data as of June 30, 2020 and the statements of comprehensive loss for the six-month periods ended June 30, 2020 and 2019 have been derived from our unaudited interim condensed consolidated financial statements included elsewhere in this proxy statement. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of our management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the information set forth herein. Interim financial results are not necessarily indicative of results for the full year or any future reporting period.

Selected Statement of Comprehensive (Loss) Income Data

 

    Six Months Ended June 30,     Year Ended December 31,  
    2020     2019     2019     2018     2017  
(in thousands, except share and per share data)                              

Revenues

  $ 1,520,939     $ 1,790,505     $ 3,785,063     $ 3,707,628     $ 2,416,927  

Cost of revenues

    1,256,616       1,514,098       3,163,443       3,108,651       1,892,694  

Selling, general, and administrative expenses

    121,625       96,744       175,373       152,493       135,441  

Impairment of goodwill and indefinite-lived assets

    —         —         —         1,232,000       —    

(Recovery from) loss on Take 5

    (7,700     —         —         79,165       —    

Depreciation and amortization

    118,957       116,552       232,573       225,233       179,990  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    1,489,498       1,727,394       3,571,389       4,797,542       2,208,125  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    31,441       63,111       213,674       (1,089,914     208,802  

Interest expense, net

    103,315       120,709       232,077       229,643       179,566  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

    (71,874     (57,598     (18,403     (1,319,557     29,236  

(Benefit from) provision for income taxes

    (12,337     (309     1,353       (168,334     (358,806
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

    (59,537     (57,289     (19,756     (1,151,223     388,042  

Less: net (loss) income attributable to noncontrolling interest

    (425     507       1,416       6,109       1,637  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to stockholder of Advantage

  $ (59,112   $ (57,796   $ (21,172   $ (1,157,332   $ 386,405  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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    Six Months Ended June 30,     Year Ended December 31,  
    2020     2019     2019     2018     2017  
(in thousands, except share and per share data)                              

Net (loss) income per share of common stock:

         

Basic

  $ (472,898   $ (462,368   $ (169,386   $ (9,258,643   $ 3,829,953  

Diluted

  $ (472,898   $ (462,368   $ (169,386   $ (9,258,643   $ 3,829,953  

Weighted-average shares of common stock:

         

Basic

    125       125       125       125       101  

Diluted

    125       125       125       125       101  
    Six Months Ended June 30,     Year Ended December 31,  
    2020     2019     2019     2018     2017  
(in thousands)                              

Segment Financial Data:

         

Operating Income (Loss) by Segment:

         

Sales Segment Operating Income (Loss)

  $ 35,215     $ 39,596     $ 127,961     $ (1,072,702   $ 172,171  

Marketing Segment Operating (Loss) Income

    (3,774     23,515       85,713       (17,212     36,631  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Income (Loss)

  $ 31,441     $ 63,111     $ 213,674     $ (1,089,914   $ 208,802  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA by Segment(1)

         

Sales Segment Adjusted EBITDA

  $ 168,583     $ 136,061     $ 309,531     $ 295,195     $ 342,067  

Marketing Segment Adjusted EBITDA

    49,812       78,810       194,500       176,179       97,593  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Adjusted EBITDA(1)

  $ 218,395     $ 214,871     $ 504,031     $ 471,374     $ 439,660  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Financial Data:

         

Adjusted Net Income(2)

  $ 65,651     $ 42,670     $ 169,109     $ 136,151     $ 138,044  

Adjusted EBITDA Margin(3)

    14.4     12.0     13.3     12.7     18.2

 

(1)

Adjusted EBITDA and Adjusted EBITDA by segment are supplemental financial measures of our operating performance that are not recognized under GAAP. Adjusted EBITDA means net income (loss) before (i) interest expense, net, (ii) (benefit from) provision for income taxes, (iii) depreciation, (iv) impairment of goodwill and indefinite-lived assets, (v) amortization of intangible assets, (vi) private equity sponsors’ management fees and equity-based compensation expense, (vii) fair value adjustments of contingent consideration related to acquisitions, (viii) acquisition-related expenses, (ix) costs associated with COVID-19, net of benefits received, (x) EBITDA for economic interests in investments, (xi) restructuring expenses, (xii) litigation expenses, (xiii) (Recovery from) loss on Take 5, (xiv) costs associated with the Take 5 Matter and (xv) other adjustments that management believes are helpful in evaluating our operating performance.

We supplementally present Adjusted EBITDA and Adjusted EBITDA by segment because they are key operating measures used by us to assess our financial performance. These measures adjust for items that we believe do not reflect the ongoing operating performance of our business, such as certain noncash items, unusual or infrequent items or items that change from period to period without any material relevance to our operating performance. We evaluate these measures in conjunction with our results according to GAAP because we believe they provide a more complete understanding of factors and trends affecting our business than GAAP measures alone. Furthermore, the agreements governing our indebtedness contain covenants and other tests based on measures substantially similar to Adjusted EBITDA. None of Adjusted EBITDA or Adjusted EBITDA by segment should be considered as an alternative for our most directly comparable measure presented on a GAAP basis.



 

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A reconciliation of net (loss) income to Adjusted EBITDA is provided in the following table:

 

Consolidated   Six Months Ended June 30,     Year Ended December 31,  
          2020                 2019           2019     2018     2017  
(in thousands)                              

Net (loss) income

  $ (59,537   $ (57,289   $ (19,756   $ (1,151,223   $ 388,042  

Add:

         

Interest expense, net

    103,315       120,709       232,077       229,643       179,566  

(Benefit from) provision for income taxes

    (12,337     (309     1,353       (168,334     (358,806

Depreciation and amortization

    118,957       116,552       232,573       225,233       179,990  

Impairment of goodwill and indefinite-lived assets

    —         —         —         1,232,000       —    

Sponsors’ management fee and equity-based compensation expense(a)

    8,021       3,098       7,960       (2,432     9,882  

Fair value adjustments related to contingent consideration related to acquisitions(b)

    8,223       5,772       1,516       (54,464     12,757  

Acquisition-related expenses(c)

    10,390       17,454       31,476       61,155       25,251  

EBITDA for economic interests in investments(d)

    (2,785     (2,777     (8,421     (7,212     (4,636

Restructuring expenses(e)

    47,663       3,013       5,385       12,465       7,343  

Litigation expenses(f)

    2,604       —         3,500       1,200       271  

Costs associated with COVID-19, net of benefits received(g)

    (19     —         —         —         —    

(Recovery from) loss on Take 5

    (7,700     —         —         79,165       —    

Costs associated with the Take 5 Matter(h)

    1,600       8,648       16,368       14,178       —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 218,395     $ 214,871     $ 504,031     $ 471,374     $ 439,660  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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Financial information by segment, including a reconciliation of operating income (loss), the closest GAAP financial measure, to Adjusted EBITDA by segment is provided in the following table:

 

Sales Segment   Six Months Ended June 30,     Year Ended December 31,  
          2020                 2019           2019     2018     2017  
(in thousands)                              

Operating income (loss)

  $ 35,215     $ 39,596     $ 127,961     $ (1,072,702   $ 172,171  

Add:

         

Depreciation and amortization

    85,341       80,487       161,563       157,098       139,634  

Impairment of goodwill and indefinite-lived assets

    —         —         —         1,232,000       —    

Sponsors’ management fee and equity-based compensation expense(a)

    6,737       2,753       6,418       1,020       8,043  

Fair value adjustments related to contingent consideration related to acquisitions(b)

    8,440       4,561       (2,720     (54,628     2,397  

Acquisition-related expenses(c)

    8,237       9,943       18,276       31,699       19,110  

EBITDA for economic interests in investments(i)

    (3,409     (2,829     (8,395     (7,155     (4,520

Restructuring expenses(e)

    24,078       1,550       2,928       6,663       5,159  

Costs associated with COVID-19, net of benefits received(g)

    1,340       —         —         —         —    

Litigation expenses(f)

    2,604       —         3,500       1,200       73  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales Segment Adjusted EBITDA

  $ 168,583     $ 136,061     $ 309,531     $ 295,195     $ 342,067  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Marketing Segment   Six Months Ended June 30,     Year Ended December 31,  
          2020                 2019           2019     2018     2017  
(in thousands)                              

Operating (loss) income

  $ (3,774   $ 23,515     $ 85,713     $ (17,212   $ 36,631  

Add:

         

Depreciation and amortization

    33,616       36,065       71,010       68,135       40,356  

Sponsors’ management fee and equity-based compensation expense(a)

    1,284       345       1,542       (3,452     1,839  

Fair value adjustments related to contingent consideration related to acquisitions(b)

    (217     1,211       4,236       164       10,360  

Acquisition-related expenses(c)

    2,153       7,511       13,200       29,456       6,141  

EBITDA for economic interests in investments(j)

    624       52       (26     (57     (116

Restructuring expenses(e)

    23,585       1,463       2,457       5,802       2,184  

Costs associated with COVID-19, net of benefits received(g)

    (1,359     —         —         —         —    

Litigation expenses(f)

    —         —         —         —         198  

(Recovery from) loss on Take 5

    (7,700     —         —         79,165       —    

Costs associated with the Take 5 Matter(h)

    1,600       8,648       16,368       14,178       —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Marketing Segment Adjusted EBITDA

  $ 49,812     $ 78,810     $ 194,500     $ 176,179     $ 97,593  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (or certain of the management companies associated with it or its advisors) pursuant to a management services agreement in the six months ended June 30, 2020 and 2019 and the years ended December 31, 2019, 2018 and 2017. Also represents expenses related to (i) equity-based compensation associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors,



 

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  (ii) compensation amounts associated with potential payments under the Management Incentive Plan in March 2022, and (iii) compensation amounts associated with the anniversary payments to Tanya Domier. Our equity-based compensation includes $8.2 million of fair value adjustment associated with the Common Series D Units of Topco due to revised future year earnings expectations for the year ended December 31, 2018.
  (b)

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the applicable periods. See Note 7 to our unaudited condensed consolidated financial statements for six months ended June 30, 2020 and 2019 and Note 6 to our consolidated financial statements for the year ended December 31, 2019 for additional information.

  (c)

Represents fees and costs associated with activities related to our acquisitions and restructuring activities related to our equity ownership, including professional fees, due diligence and integration activities.

  (d)

Represents additions of $2.4 million, $3.0 million, $4.8 million, $5.1 million, and $4.6 million to reflect our proportional share of Adjusted EBITDA related to our equity method investments and a reduction of $5.2 million, $5.8 million, $13.2 million, $12.3 million, and $9.2 million, to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements for the six months ended June 30, 2020 and 2019 and the years ended December 31, 2019, 2018 and 2017, respectively.

  (e)

Represents fees and costs associated with various internal reorganization activities among our consolidated entities. The increase for the six months ended June 30, 2020 relates primarily to costs related to the abandonment of certain office leases. For additional information, refer to Note 11 — Commitments and Contingencies of our condensed consolidated financial statements for the six months ended June 30, 2020.

  (f)

Represents legal settlements that are unusual or infrequent costs associated with our operating activities.

  (g)

Represents (1) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment; and (2) benefits received from government grants for COVID-19 relief.

  (h)

Represents $1.6 million and zero of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the six months ended June 30, 2020 and 2019, respectively. Represents zero and $8.7 million of operating expenses associated with the Take 5 business, which we believe do not reflect the ongoing operating performance of our business for the six months ended June 30, 2020 and 2019, respectively. For the year ended December 31, 2019 and 2018, we incurred $8.6 million and $14.2 million of operating expenses associated with the Take 5 business, respectively, and $7.7 million and zero of costs associated with investigation and remediation activities, including professional fees. For more information on the Take 5 Matter, please see the section of this proxy statement titled “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

  (i)

Represents additions of $2.4 million, $3.0 million, $4.8 million, $5.1 million, and $4.6 million to reflect our proportional share of Adjusted EBITDA related to our equity method investments and a reduction of $5.8 million, $5.8 million, $13.2 million, $12.3 million, and $9.1 million, to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements for the six months ended June 30, 2020 and 2019 and the years ended December 31, 2019, 2018 and 2017, respectively.

  (j)

Represents a reduction to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements.

 

(2)

Adjusted Net Income is a non-GAAP financial measure. Adjusted Net Income means net (loss) income before (i) impairment of goodwill and indefinite-lived assets, (ii) our private equity sponsors management fees and equity-based compensation expense, (iii) fair value adjustments of contingent consideration related to acquisitions, (iv) acquisition-related expenses, (v) restructuring expenses, (vi) litigation expenses,



 

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  (vii) costs associated with COVID-19, net of benefits recieved, (viii) amortization of intangible assets, (ix) (Recovery from) loss on Take 5, (x) costs associated with the Take 5 Matter, (xi) net income attributable to noncontrolling interests, (xii) impact of changes in U.S. federal tax laws, (xiii) other adjustments that management believes are helpful in evaluating our operating performance, and (xiii) related tax adjustments.

We supplementally present Adjusted Net Income because we use it as a supplemental measure to evaluate the performance of our business in a way that also considers our ability to generate profit without the impact of items that we do not believe are indicative of our operating performance or are unusual or infrequent in nature and aid in the comparability of our performance from period to period. Adjusted Net Income should not be considered as an alternative for our most directly comparable measure presented on a GAAP basis. A reconciliation of net (loss) income to Adjusted Net Income is provided in the following table:

 

    Six Months Ended
June 30,
    Year Ended December 31,  
    2020     2019     2019     2018     2017  
(in thousands)                              

Net (loss) income

  $ (59,537   $ (57,289   $ (19,756   $ (1,151,223   $ 388,042  

Less: Net (loss) income attributable to noncontrolling interest

    (425     507       1,416       6,109       1,637  

Add:

         

Impairment of goodwill and indefinite-lived assets

    —         —         —         1,232,000       —    

Sponsors’ management fee and equity-based compensation expense(a)

    8,021       3,098       7,960       (2,432     9,882  

Fair value adjustments related to contingent consideration related to acquisitions(b)

    8,223       5,772       1,516       (54,464     12,757  

Acquisition-related expenses(c)

    10,390       17,454       31,476       61,155       25,251  

Restructuring expenses(d)

    47,663       3,013       5,385       12,465       7,343  

Litigation expenses(e)

    2,604       —         3,500       1,200       271  

Costs associated with COVID-19, net of benefits received(f)

    (19     —         —         —         —    

Amortization of intangible assets(g)

    95,498       95,218       189,881       188,831       149,131  

(Recovery from) loss on Take 5

    (7,700     —         —         79,165       —    

Costs associated with the Take 5 Matter(h)

    1,600       8,648       16,368       14,178       —    

Tax adjustments related to non-GAAP adjustments(i)

    (41,517     (32,737     (65,805     (238,615     (70,660

Impact of tax law change on deferred taxes(j)

    —         —         —         —         (382,336
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Net Income

  $ 65,651     $ 42,670     $ 169,109     $ 136,151     $ 138,044  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (a)

Represents the management fees and reimbursements for expenses paid to certain of the Advantage Sponsors (or certain of the management companies associated with it or its advisors) pursuant to a management services agreement in the six months ended June 30, 2020 and 2019 and the years ended December 31, 2019, 2018 and 2017. Also represents expenses related to (i) equity-based compensation associated with grants of Common Series D Units of Topco made to one of the Advantage Sponsors, which provides services to us, (ii) compensation amounts associated with potential payments under the Management Incentive Plan in March 2022, and (iii) compensation amounts associated with the anniversary payments to Tanya Domier. Our equity-based compensation includes $8.2 million of fair value adjustment associated with the Common Series D Units of Topco due to revised future year earnings expectations for the year ended December 31, 2018.

  (b)

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, net, for the



 

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  applicable periods. See Note 7 to our unaudited condensed consolidated financial statements for six months ended June 30, 2020 and 2019 and Note 6 to our consolidated financial statements for the year ended December 31, 2019 for additional information.
  (c)

Represents fees and costs associated with activities related to our acquisitions and restructuring activities related to our equity ownership, including professional fees, due diligence and integration activities.

  (d)

Represents fees and costs associated with various internal reorganization activities among our consolidated entities. The increase for the six months ended June 30, 2020 relates primarily to costs related to the abandonment of certain office leases. For additional information, refer to Note 11 — Commitments and Contingencies of our condensed consolidated financial statements for the six months ended June 30, 2020.

  (e)

Represents legal settlements that are unusual or infrequent costs associated with our operating activities.

  (f)

Represents (1) costs related to implementation of strategies for workplace safety in response to COVID-19, including employee-relief fund, additional sick pay for front-line associates, medical benefit payments for furloughed associates, and personal protective equipment and (2) benefits received from government grants for COVID-19 relief.

  (g)

Represents the amortization of intangible assets recorded in connection with the 2014 Topco Acquisition and our other acquisitions.

  (h)

Represents $1.6 million and zero of costs associated with investigation and remediation activities related to the Take 5 Matter, primarily, professional fees and other related costs, respectively for the six months ended June 30, 2020 and 2019, respectively. Represents zero and $8.7 million of operating expenses associated with the Take 5 business, which we believe do not reflect the ongoing operating performance of our business for the six months ended June 30, 2020 and 2019, respectively. For the year ended December 31, 2019 and 2018, we incurred $8.6 million and $14.2 million of operating expenses associated with the Take 5 business, respectively, and $7.7 million and zero of costs associated with investigation and remediation activities, including professional fees. For more information on the Take 5 Matter, please see the section of this proxy statement titled “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

  (i)

Represents the tax provision or benefit associated with the adjustments above, taking into account the Company’s applicable tax rates, after excluding adjustments related to items that do not have a related tax impact.

  (j)

Represents the changes in tax law as a result of the implementation of the U.S. federal income tax legislation referred to as the Tax Cuts and Jobs Act.

 

(3)

Adjusted EBITDA Margin is calculated as a percentage equal to the Adjusted EBITDA divided by respective revenues for the periods ended as follows:

 

     Six Months Ended
June 30,
    Year Ended December 31,  

(in thousands)

   2020     2019     2019     2018     2017  

Numerator — Adjusted EBITDA

   $ 218,395     $ 214,871     $ 504,031     $ 471,374     $ 439,660  

Denominator — Revenues

     1,520,939       1,790,505       3,785,063       3,707,628       2,416,927  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA Margin

     14.4     12.0     13.3     12.7     18.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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Selected Balance Sheet Data

 

     June 30,
2020
     December 31,  
     2019      2018      2017  
(in thousands)                            

Cash and cash equivalents

   $ 446,341      $ 184,224      $ 141,590      $ 186,706  

Total assets(a)(b)(c)

     6,019,105        6,012,683        5,994,931        7,378,991  

Long-term debt, net of current portion

     3,289,967        3,172,087        3,181,465        3,052,932  

Stockholder’s equity

     1,601,465        1,669,806        1,669,314        2,847,366  

 

(a)

As of January 1, 2019, we adopted Accounting Standard Update, or ASU, 2016-02, Leases, and its related amendments. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. As a result of the adoption, “Other Assets,” “Other accrued expenses,” and “Other long-term liabilities” in the Condensed Consolidated Balance Sheets increased by $98.8 million, $33.5 million and $65.4 million, respectively.

(b)

During the year ended December 31, 2018, we recognized non-cash goodwill and non-cash intangible asset impairment charges of $652.0 million and $580.0 million, respectively, in our sales segment due to revised future year earnings expectations, primarily related to a reduction in revenues in several of our in-store reset and merchandising programs in 2018. Total assets as of December 31, 2018 reflect the recognition of additional goodwill of $76.2 million and other intangible assets, net of $49.6 million, in each case, as recognized in connection with the nine acquisitions completed during the year.

(c)

As of December 31, 2017, total assets reflect the recognition of additional goodwill of $460.3 million and other intangible assets, net of $331.1 million, in each case, as recognized in connection with the Daymon Acquisition.



 

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Reconciliation of Net Income (Loss) to Adjusted EBITDA for the

Years Ended December 31, 2008 through December 31, 2016

The following table presents a reconciliation of our net income (loss) to Adjusted EBITDA for the years ended December 31, 2008 through December 31, 2016. Unless otherwise stated or the context otherwise requires, any reference hereinafter to the “Successor” reflects the operations of Advantage after July 25, 2014, the date of the 2014 Topco Acquisition, and any reference to the “Predecessor” refers to the operations of Advantage Sales & Marketing Inc. on or prior to the date of the 2014 Topco Acquisition. Except as described in the following table and the accompanying footnotes, net (loss) income and the other financial data included in the following table (other than Adjusted EBITDA) are derived from our audited financial statements for such periods that are not included or incorporated by reference in this proxy statement.

 

    Year Ended December 31,  
    2016     2015     2014(a)     2013     2012     2011     2010(b)     2009     2008  
(in thousands)                                                      

Net income (loss)

  $ 31,165     $ 24,886     $ (98,984   $ 35,072     $ 4,253     $ (24,442   $ (34,984   $ 20,622     $ (201,052

Add:

                 

Impairment of definite lived intangibles(c)

    —         —         —         —         —         —         —         26,199       255,211  

Interest expense, net

    167,360       160,895       168,123       106,020       112,426       106,738       96,606       45,989       59,213  

Provision for (benefit from) income taxes

    22,623       18,202       (16,965     17,922       (8,106     (8,471     (50     16,538       (13,074

Depreciation and amortization

    170,260       164,584       143,954       126,648       144,912       124,644       57,566       60,234       53,189  

Sponsors’ management fee(d)

    7,622       7,463       3,032       1,724       1,855       1,771       758       668       931  

Fair value adjustments related to contingent consideration(e)

    (841     (31,305     (11,979     (2,278     —         —         —         (290     (5,879

Acquisition-related costs(f)

    10,368       9,857       140,423       2,547       719       5,115       65,754       —         —    

EBITDA for economic interests in investments(g)

    1,778       1,426       (469     (13,355     (11,107     84       —         —         —    

Restructuring expenses(h)

    1,890       5,498       —         —         —         —         —         —         —    

Litigation expenses(i)

    (975     3,984       —         —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 411,250     $ 365,490     $ 327,135     $ 274,300     $ 244,952     $ 205,439     $ 185,650     $ 169,960     $ 148,539  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

For the purpose of comparability and as a result of the 2014 Topco Acquisition on July 25, 2014, net loss and the other financial data for the year ended December 31, 2014 presented above represents the mathematical addition of the audited results of Successor for the period from July 26, 2014 to December 31, 2014, and the audited results of Predecessor for the period from January 1, 2014 to July 25, 2014. However, our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to this combined information and, accordingly, does not express an opinion or any other form of assurance with respect thereto. The presentation above has not been made in accordance with Article 11 of Regulation S-X, but we believe the comparison to this addition assists readers in understanding and assessing the trends and significant changes, provides a more meaningful method of comparison, and does not impact the drivers of the financial changes between the relevant periods.

(b)

For the purpose of comparability and as a result of the 2010 Acquisition on December 16, 2010, net loss and the other financial data for the year ended December 31, 2010 presented above represents the mathematical addition of the audited results of a successor entity for the period from December 17, 2010 to December 31, 2010, and the audited results of a predecessor entity for the period from January 1, 2010 to December 16, 2010. However, our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to this combined information and, accordingly, does not express an opinion or any other form of assurance with respect thereto. The presentation above has not been made in accordance with Article 11 of Regulation S-X, but we believe the comparison to



 

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  this addition assists readers in understanding and assessing the trends and significant changes, provides a more meaningful method of comparison, and does not impact the drivers of the financial changes between the relevant periods.
(c)

Represents impairment charges associated with client relationships and trade names and identifiable intangible assets impairment that were the result of management’s decision to discontinue use of certain trade names.

(d)

Represents the management fees and reimbursements for expenses paid to affiliates of certain of our private equity sponsors pursuant to a management services agreement in the years ended December 31, 2016 and December 31, 2015 and the period from July 26, 2014 through December 31, 2014. At the completion of the business combination, the management services agreement with our private equity sponsors will terminate, and we will be obligated to make a final payment of $4.0 million to affiliates of certain of our private equity sponsors. Also represents expenses related to equity-based compensation associated with grants of units of Topco made to one of the Topco Acquisition Sponsors, which provides services to us and management fees paid to affiliates of our previous private equity sponsors in the years ended December 31, 2007 through July 25, 2014.

(e)

Represents adjustments to the estimated fair value of our contingent consideration liabilities related to our acquisitions, excluding the present value accretion recorded in interest expense, for the applicable periods.

(f)

Represents fees and costs associated with changes in our and the Predecessor’s equity ownership and activities related to acquisitions. Transaction fees related to the change in equity ownership consist of professional services fees including legal, accounting, and other consultants, equity compensation that vested upon the completion of the 2014 Topco Acquisition, equity compensation that vested upon the completion of the 2010 Acquisition, bonus compensation payments related to the 2014 Topco Acquisition and the 2010 Acquisition, and fair value lease amortization resulting from the purchase accounting related to the 2014 Topco Acquisition and the 2010 Acquisition. Acquisition-related costs are comprised of professional fees, due diligence, and integration activities.

(g)

Represents additions to reflect our proportional share of Adjusted EBITDA related to our equity method investments and reductions to remove the Adjusted EBITDA related to the minority ownership percentage of the entities that we fully consolidate in our financial statements, in each case, as follows:

 

    Year Ended December 31,  
    2016     2015     2014     2013     2012     2011     2010     2009     2008  
(in thousands)                                                      

Equity method investments

  $ 4,395     $ 2,542     $ —       $ —       $ —       $ —       $ —       $ —       $ —    

Minority ownership percentage of fully consolidated entities

    (2,617     (1,116     (469     (13,355     (11,107     84       —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA for economic interests in investments

  $ 1,778     $ 1,426     $ (469   $ (13,355   $ (11,107   $ 84     $ —       $ —       $ —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(h)

Represents fees and costs associated with various internal reorganization activities among our consolidated entities.

(i)

Represents legal settlements that are unusual or infrequent costs associated with our operating activities.



 

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Adjusted EBITDA Margin for the Year Ended December 31, 2008 through December 31, 2016

 

    Year Ended December 31,  
    2016     2015     2014(a)     2013     2012     2011     2010(b)     2009     2008  
(in thousands)                                                      

Numerator:

                 

Adjusted EBITDA

  $ 411,250     $ 365,490     $ 327,135     $ 274,300     $ 244,952     $ 205,439     $ 185,650     $ 169,960     $ 148,539  

Denominator:

                 

Revenues

  $ 2,100,235     $ 1,895,046     $ 1,713,720     $ 1,575,254     $ 1,401,406     $ 1,170,623     $ 1,109,859     $ 953,060     $ 923,491  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA Margin

    19.5     19.3     19.1     17.4     17.5     17.5     16.7     17.8     16.1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

For the purpose of comparability and a result of the 2014 Topco Acquisition on July 25, 2014, net loss and the other financial data for the year ended December 31, 2014 presented above represents the mathematical addition of the audited results of Successor for the period from July 26, 2014 to December 31, 2014, and the audited results of Predecessor for the period January 1, 2014 to July 25, 2014. However, our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to this combined information and, accordingly, does not express an opinion or any other form of assurance with respect thereto. The presentation above has not been made in accordance with Article 11 of Regulation S-X, but we believe the comparison to this addition assists readers in understanding and assessing the trends and significant changes, provides a more meaningful method of comparison, and does not impact the drivers of the financial changes between the relevant periods.

(b)

For the purpose of comparability and a result of the 2010 Acquisition on December 16, 2010, net loss and the other financial data for the year ended December 31, 2010 presented above represents the mathematical addition of the audited results of successor entity for the period from December 17, 2010 to December 31, 2010, and the audited results of predecessor entity for the period January 1, 2010 to December 10, 2010. However, our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to this combined information and, accordingly, does not express an opinion or any other form of assurance with respect thereto. The presentation above has not been made in accordance with Article 11 of Regulation S-X, but we believe the comparison to this addition assists readers in understanding and assessing the trends and significant changes, provides a more meaningful method of comparison, and does not impact the drivers of the financial changes between the relevant periods.



 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial information gives effect to the business combination and the other transactions contemplated by the Transactions and described in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.” The summary unaudited pro forma condensed combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the summary unaudited pro forma condensed combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined entity will experience. Conyers Park and Advantage have not had any historical relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The unaudited pro forma condensed combined balance sheet as of June 30, 2020 combines the unaudited condensed balance sheet of Conyers Park as of June 30, 2020 with the unaudited condensed consolidated balance sheet of Advantage as of June 30, 2020, giving effect to the Transactions as if they had been consummated on that date.

The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2020 and the year ended December 31, 2019 combine the historical results of Conyers Park and Advantage for such periods as if the Transactions had been consummated on January 1, 2019.

The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are included elsewhere in this proxy statement:

 

   

The historical unaudited condensed financial statements of Conyers Park as of and for the six months ended June 30, 2020 and the historical audited financial statements of Conyers Park as of and for the year ended December 31, 2019; and

 

   

The historical unaudited condensed consolidated financial statements of Advantage as of and for the six months ended June 30, 2020 and the historical audited consolidated financial statements of Advantage as of and for the year ended December 31, 2019.

The foregoing historical financial statements have been prepared in accordance with GAAP.

The summary unaudited pro forma condensed combined financial information should also be read together with “Conyers Park’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other financial information included elsewhere in this proxy statement.

The historical financial information has been adjusted to give pro forma effect to events that are (i) related and/or directly attributable to the Transactions, (ii) factually supportable, and (iii) with respect to the pro forma statement of operations, are expected to have a continuing impact on the results of the combined entity. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an accurate understanding of the combined entity upon consummation of the Transactions.

Pursuant to Conyers Park’s current certificate of incorporation, holders of Class A common stock are being offered the opportunity to redeem, upon the Closing, shares of Class A common stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in Conyers Park’s trust account. For illustrative purposes only, the estimated per share redemption price is assumed to be $10.00.

 

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The summary unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemptions of Conyers Park shares of Class A common stock for cash:

 

   

Assuming No Redemptions. This presentation assumes:

 

   

No holders of Conyers Park Class A common stock exercise their redemption rights with respect to such shares in connection with the Merger;

 

   

Conyers Park issues 70,000,000 shares of Class A common stock in the PIPE Investment, including 20,000,000 shares to certain of the Advantage Sponsors or their affiliates and the Sponsor; and

 

   

Advantage borrows $2.1 billion under the New Term Loan Facility; and

 

   

Assuming Maximum Redemptions. This presentation assumes:

 

   

The redemption of 45,000,000 shares of Conyers Park Class A common stock in connection with the Merger;

 

   

Conyers Park issues 91,987,300 shares of Class A common stock in the PIPE Investment, including 41,987,300 shares to certain of the Advantage Sponsors or their affiliates and the Sponsor;

 

   

Advantage borrows $2.1 billion under the New Term Loan Facility and $100.0 million under the New Revolving Credit Facility; and

 

   

$125.0 million of Advantage Available Cash.

Topco will hold 203,750,000 shares of Class A common stock and the Advantage Sponsors will directly hold 20,000,000 shares of Class A common stock immediately after the Closing and the consummation of the related Transactions. Assuming no redemptions of Class A common stock in connection with the Merger, Topco, the Advantage Sponsors or their affiliates and the Sponsor will hold approximately 71.21% of the Class A common stock as of such time. Assuming the redemptions of 45,000,000 shares of Class A common stock in connection with the Merger, Topco, the Advantage Sponsors or their affiliates and the Sponsor will hold approximately 83.71% of the Class A common stock of such time. An additional summary of pro forma ownership assuming no redemptions and maximum redemptions is as follows:

 

     No Redemptions     Maximum Redemptions  
     Number of
Shares
     %
Ownership
    Number of
Shares
     %
Ownership
 

Ownership of Class A Common Stock

          

Topco(1)

     203,750,000        61.74     203,750,000        66.37

Conyers Park existing public stockholders

     45,000,000        13.64               0.00

PIPE Shares — Non-affiliated holders

     50,000,000        15.15     50,000,000        16.29

PIPE Shares — Advantage Sponsors or their affiliates and Sponsor

     20,000,000        6.06     41,987,300        13.68

Founder Shares - Sponsor and current Conyers Park directors(2)

     11,250,000        3.41     11,250,000        3.66
  

 

 

    

 

 

   

 

 

    

 

 

 

Total shares outstanding(1)(2)(3)

     330,000,000        100.00     306,987,300        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) 

Excludes the 5,000,000 Performance Shares to be issued to Topco under the Merger Agreement, which will remain subject to vesting upon satisfaction of a market performance condition after the Closing, and until vesting Topco will not be able to vote or sell such shares.

(2) 

Includes 100,000 shares of Class B common stock held by current members of the Conyers Park board of directors.

(3) 

Excludes the outstanding 18,583,333 warrants to purchase Class A common stock, as such securities are not exercisable until 30 days after the Closing.

If the actual facts are different than these assumptions, then the amounts and shares outstanding in the unaudited pro forma condensed combined financial information will be different. The unaudited pro forma condensed combined financial information is based upon currently available information, estimates, and assumptions that management believes are reasonable as of the date hereof.

 

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Selected Unaudited Pro Forma Financial Information

 

     Conyers
Park
    Advantage     Pro Forma
Combined

(Assuming
No
Redemptions)
    Pro Forma
Combined

(Assuming
Maximum
Redemptions)
 
(in thousands except share data)                         

Statement of Operations Data — Six Months Ended June 30, 2020

        

Revenues

   $ —        $ 1,520,939     $ 1,520,939     $ 1,520,939  

Operating expense

   $ 422     $ 1,489,498     $ 1,485,029     $ 1,485,029  

Operating (loss) income

   $ (422   $ 31,441     $ 35,910     $ 35,910  

Net income (loss) attributable to stockholders

   $ 919     $ (59,112   $ (23,329   $ (24,266

Basic and diluted earnings (loss) per share, Class A common stock

   $ 0.02       $ (0.07   $ (0.08

Statement of Operations Data — Year Ended December 31, 2019

        

Revenues

   $ —        $ 3,785,063     $ 3,785,063     $ 3,785,063  

Operating expense

   $ 379     $ 3,571,389     $ 3,570,834     $ 3,570,834  

Operating (loss) income

   $ (379   $ 213,674     $ 214,229     $ 214,229  

Net income (loss) attributable to stockholders

   $ 2,469     $ (21,172   $ 64,135     $ 62,259  

Basic and diluted earnings per share, Class A common stock

   $ 0.05       $ 0.19     $ 0.20  

Balance Sheet Data — June 30, 2020

        

Cash and cash equivalents

   $ 827     $ 446,341     $ 158,718     $ 28,591  

Total assets

   $ 455,344     $ 6,019,105     $ 5,731,699     $ 5,601,572  

Long-term debt, net of current portion

   $ —        $ 3,289,967     $ 1,987,375     $ 2,087,375  

Stockholders’ equity

   $ 4,999     $ 1,601,465     $ 2,624,880     $ 2,394,753  

 

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COMPARATIVE PER SHARE DATA

The following table sets forth:

 

   

Historical per share information of Conyers Park for the six months ended June 30, 2020 and year ended December 31, 2019; and

 

   

Unaudited pro forma per share information of the combined entity for the six months ended June 30, 2020 and December 31, 2019 after giving effect to the Merger, assuming two redemption scenarios as follows:

 

   

Assuming No Redemptions. This presentation assumes:

 

   

No holders of Conyers Park Class A common stock exercise their redemption rights with respect to such shares in connection with the Merger;

 

   

Conyers Park issues 70,000,000 shares of Class A common stock in the PIPE Investment, including 20,000,000 shares to certain of the Advantage Sponsors or their affiliates and the Sponsor; and

 

   

Advantage borrows $2.1 billion under the New Term Loan Facility; and

 

   

Assuming Maximum Redemptions. This presentation assumes:

 

   

The redemption of 45,000,000 shares of Conyers Park Class A common stock in connection with the Merger;

 

   

Conyers Park issues 91,987,300 shares of Class A common stock in the PIPE Investment, including 41,987,300 shares to certain of the Advantage Sponsors or their affiliates and the Sponsor;

 

   

Advantage borrows $2.1 billion under the New Term Loan Facility and $100.0 million under the New Revolving Credit Facility; and

 

   

$125.0 million of Advantage Available Cash.

Information reflected as if the Transactions had occurred on January 1, 2019.

The following table is also based on the assumption that there are no adjustments for the outstanding public or private placement warrants issued by Conyers Park as such securities are not exercisable until 30 days after the Closing.

 

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The historical information should be read in conjunction with “Advantage’s Selected Historical Financial Information,” “Conyers Park’s Selected Historical Financial Information,” “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Conyers Park’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this proxy statement and the audited historical financial statements and the related notes of Advantage and Conyers Park contained elsewhere in this proxy statement. The unaudited pro forma condensed combined share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement. The unaudited pro forma condensed combined net income per share information below does not purport to represent what the actual results of operations of Advantage would have been had the Merger been completed or to project Advantage’s results of operations that may be achieved after the Merger. The unaudited pro forma book value per share information below does not purport to represent what the book value of Advantage would have been had the Merger been completed nor the book value per share for any future date or period.

 

    Conyers Park     Advantage
    Pro Forma
Combined

(Assuming
No Redemptions)
    Pro Forma
Combined

(Assuming
Maximum
Redemptions)
 
(in thousands except share and per share data)                        

Statement of Operations Data — Six Months Ended June 30, 2020

       

Net income (loss) attributable to stockholders

  $ 919     $ (59,112   $ (23,329   $ (24,266

Weighted average shares outstanding—basic and diluted

    45,000,000         330,000,000       306,987,300  

Basic and diluted earnings (loss) per share

  $ 0.02       $ (0.07   $ (0.08

Statement of Operations Data — Year Ended December 31, 2019

       

Net income (loss) attributable to stockholders

  $ 2,469     $ (21,172   $ 64,135     $ 62,259  

Weighted average shares outstanding — basic and diluted

    45,000,000         330,000,000       306,987,300  

Basic and diluted earnings per share, Class A common stock

  $ 0.05       $ 0.19     $ 0.20  

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement includes statements that express Conyers Park’s and Advantage’s opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this proxy statement and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Transactions and the benefits of the Transactions, including results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which Advantage operates. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting Conyers Park and Advantage. Factors that may impact such forward-looking statements include:

 

   

the COVID-19 pandemic and the measures taken to mitigate its spread including its adverse effects on Conyers Park’s and Advantage’s business, results of operations, financial condition and liquidity;

 

   

developments with respect to retailers that are out of Advantage’s control;

 

   

changes to labor laws or wage or job classification regulations, including minimum wage, or other market-driven wage changes;

 

   

Advantage’s ability to continue to generate significant operating cash flow;

 

   

consolidation of Advantage’s clients’ industries creating pressure on the nature and pricing of its services;

 

   

consumer goods manufacturers and retailers reviewing and changing their sales, retail, marketing, and technology programs and relationships;

 

   

Advantage’s ability to successfully develop and maintain relevant omni-channel services for our clients in an evolving industry and to otherwise adapt to significant technological change;

 

   

client procurement strategies putting additional operational and financial pressure on Advantage’s services;

 

   

Advantage’s ability to effectively remediate material weaknesses and maintain proper and effective internal controls in the future;

 

   

potential and actual harms to Advantage’s business arising from the Take 5 Matter;

 

   

Advantage’s ability to identify attractive acquisition targets, acquire them at attractive prices, and successfully integrate the acquired businesses;

 

   

Advantage’s ability to hire, timely train, and retain talented individuals for its workforce, and to maintain its corporate culture as it evolves;

 

   

Advantage’s ability to avoid or manage business conflicts among competing brands;

 

   

difficulties in integrating acquired businesses, including Daymon;

 

   

Advantage’s substantial indebtedness and our ability to refinance at favorable rates;

 

   

limitations, restrictions, and business decisions involving Advantage’s joint ventures and minority investments;

 

   

exposure to foreign currency exchange rate fluctuations and risks related to Advantage’s international operations;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;

 

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the inability to complete the transactions contemplated by the transaction agreement due to the failure to obtain approval of the stockholders of Conyers Park or other conditions to closing in the Merger Agreement, including obtaining the New Senior Secured Credit Facilities;

 

   

the ability to meet applicable listing standards following the consummation of the transactions contemplated by the Merger Agreement;

 

   

the risk that the proposed transaction disrupts current plans and operations of Advantage as a result of the announcement and consummation of the transactions contemplated by the Merger Agreement;

 

   

the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, competition, the ability of New Advantage to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees;

 

   

costs related to the proposed business combination;

 

   

changes in applicable laws or regulations;

 

   

the possibility that Conyers Park or Advantage may be adversely affected by other political, economic, business, and/or competitive factors;

 

   

other factors disclosed in this proxy statement; and

 

   

other factors beyond Conyers Park’s or Advantage’s control.

The forward-looking statements contained in this proxy statement are based on Conyers Park’s and Advantage’s current expectations and beliefs concerning future developments and their potential effects on the Transactions and Advantage. There can be no assurance that future developments affecting Conyers Park and/or Advantage will be those that Conyers Park or Advantage has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond Conyers Park’s and/or Advantage’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Conyers Park and Advantage will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Before a stockholder grants its proxy or instructs how its vote should be cast or votes on the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the employee purchase plan proposal, the NASDAQ proposal or the adjournment proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement may adversely affect Conyers Park and Advantage.

 

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RISK FACTORS

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement. The following risk factors apply to the business and operations of Conyers Park, Advantage and the business and operations of New Advantage following the completion of the business combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the business combination, and may have an adverse effect on the business, cash flows, financial condition and results of operations of Conyers Park, Advantage and the post-combination company. You should also carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” Conyers Park, Advantage and New Advantage may also face additional risks and uncertainties that are not presently known to Conyers Park or Advantage, or that Conyers Park or Advantage currently deem immaterial, which may also impair our or Conyers Park’s, Advantage’s and New Advantage’s business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

Risks Related to Advantage’s Business and Operations Following the Business Combination

Except where noted or the context otherwise requires, as used in this subsection, the terms “we,” “us,” “our,” “our company” and “our business” refer to Advantage and its consolidated subsidiaries prior to the consummation of the business combination, and New Advantage and its consolidated subsidiaries following the consummation of the business combination.

The COVID-19 pandemic and the measures taken to mitigate its spread have had, and are likely to continue to have, an adverse effect on our business, results of operations, financial condition and liquidity.

The COVID-19 pandemic, including the measures taken to mitigate its spread, have had, and are likely to continue to have, adverse effects on our business of operations. There are many uncertainties regarding the current COVID-19 pandemic, including the scope of potential public health issues, the anticipated duration of the pandemic and the extent of local and worldwide social, political and economic disruption it has caused and may cause in the future. To date, the COVID-19 pandemic and measures taken to mitigate the spread of COVID-19, including restrictions on large gatherings, closures of face-to-face events, “shelter in place” health orders and travel restrictions, have had far-reaching direct and indirect impacts on many aspects of our operations, including temporary termination of certain in-store demonstration services and other services, as well as on consumer behavior and purchasing patterns, in particular with respect to the foodservice industries, and declines in consumer demand for restaurant, school and hotel dining, where we promote our clients’ products. Since March 2020, our marketing segment has experienced a significant decline in revenues, primarily due to the temporary cessation of certain in-store demonstration services and decreased demand in our digital marketing services, both of which we believe were caused by the COVID-19 pandemic and the various governmental and private responses to the pandemic, and which may continue in the future. In our sales segment, we have experienced significant shifts in consumer spending preferences and habits. We can provide no assurances that the strength of that segment will continue or that we will be able to continue to evolve our business in the future as the COVID-19 pandemic continues to impact our clients’ businesses.

We have taken several actions in response to these business disruptions, including reducing certain of our discretionary expenditures, reducing our real estate foot print, through lease terminations and amendments (including abandoning several office leases prior to reaching termination agreements with its landlords), eliminating non-essential travel and terminating, furloughing or instituting pay reductions and deferrals for some of our associates, but the pandemic has had, and may continue to have, an adverse effect on our results of operations, including our revenues, our financial condition and liquidity.

 

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The COVID-19 pandemic also may have the effect of heightening many of the other risks described in these “Risk Factors”, including:

 

   

potential changes in the policies of retailers in response to the COVID-19 pandemic, including changes or restrictions in their outsourcing of sales and marketing functions and restrictions on the performance of in-store demonstration services, if at all;

 

   

potential changes in the demand for services by our clients in response to the COVID-19 pandemic;

 

   

the need for us to adapt to technological change and otherwise develop and maintain omni-channel solutions;

 

   

our ability to generate sufficient cash to service our substantial indebtedness;

 

   

our ability to maintain our credit rating;

 

   

our ability to offer high-quality customer support and maintain our reputation;

 

   

our ability to identify, and perform adequate diligence on, consummate acquisitions of attractive business targets, and then subsequently integrate acquired businesses;

 

   

our ability to hire, timely train and retain talented individuals for our workforce;

 

   

our ability to maintain our corporate culture;

 

   

severe disruption and instability in the U.S. and global financial markets or deteriorations in credit and financing conditions, which could make it difficult for us to access debt and equity capital on attractive terms, or at all;

 

   

our ability to effectively manage our operations while a significant amount of our associates continue to work remotely due to the COVID-19 pandemic;

 

   

deteriorating economic conditions, higher unemployment, public transportation disruptions or other disruptions as a result of the COVID-19 pandemic could result in lower-than-planned sales during key revenue-producing seasons, leading to lower revenues;

 

   

potential cost-saving strategies implemented by clients that reduce fees paid to third-party service providers; and

 

   

our ability to implement additional internal control measures to improve our internal control over financial reporting.

We cannot predict the full extent to which the COVID-19 pandemic may affect our business, financial condition and results of operations, as such effects will depend on how the COVID-19 pandemic and the measures taken in response to the COVID-19 pandemic continue to develop. However, these effects may continue, evolve or increase in severity, each of which could further negatively impact our business, financial condition, results of operations and liquidity.

Our business and results of operations are affected by developments with and policies of retailers that are out of our control.

A limited number of national retailers account for a large percentage of sales for our consumer goods manufacturer clients. We expect that a significant portion of these clients’ sales will continue to be made through a relatively small number of retailers and that this percentage may increase if the growth of mass retailers and the trend of retailer consolidation continues. As a result, changes in the strategies of large retailers, including a reduction in the number of brands that these retailers carry or shelf space that they dedicate to private label products, could materially reduce the value of our services to these clients or these clients’ use of our services and, in turn, our revenues and profitability. Many retailers have critically analyzed the number and variety of brands they sell, and have reduced or discontinued the sale of certain of our clients’ product lines at their stores,

 

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and more retailers may continue to do so. If this continues to occur and these clients are unable to improve distribution for their products at other retailers, our business or results of operations could be adversely affected. These trends may be accelerated as a result of the COVID-19 pandemic.

Additionally, many retailers, including several of the largest retailers in North America, which own and operate a significant number of the locations at which we provide our services, have implemented or may implement in the future, policies that designate certain service providers to be the exclusive provider or one of their preferred providers for specified services, including many of the services that we provide to such retailers or our clients. Some of these designations apply across all of such retailers’ stores, while other designations are limited to specific regions. If we are unable to respond effectively to the expectations and demands of such retailers or if retailers do not designate us as their exclusive provider or one of their preferred providers for any reason, they could reduce or restrict the services that we are permitted to perform for our clients at their facilities or require our clients to purchase services from other designated services providers, which include our competitors, either of which could adversely affect our business or results of operations.

Changes to wage or job classification regulations, including minimum wages and market-driven wage increases could impact our results of operations.

Changes in labor laws related to employee hours, wages, job classification and benefits, including health care benefits, could impact our results of operations. In addition, in response to the COVID-19 pandemic, we have significantly reduced our workforce. As of June 30, 2020, we employed approximately 58,000 associates, many of whom are paid above, but near, applicable minimum wages.

Additionally, many of our salaried associates are paid at rates that could be impacted by changes to minimum pay levels for exempt roles. Certain state or municipal jurisdictions in which we operate have recently increased their minimum wage by a significant amount, and other jurisdictions are considering or plan to implement similar actions, which may increase our labor costs. Any increases at the federal, state or municipal level to the minimum pay rate required to remain exempt from overtime pay may adversely affect our business or results of operations.

Furthermore, market competition may create further pressure for us to increase the wages paid to our associates or the benefits packages that they receive. If we experience market-driven increases in wage rates or in benefits or if we fail to increase our wages or benefits packages competitively, the quality of our workforce could decline, causing our client service to suffer. Consistently low unemployment rates may increase the likelihood or impact of such market pressures. Any of these changes affecting wages for our associates could adversely affect our business or results of operations.

We need to continue to generate significant operating cash flow in order to fund acquisitions and to service our debt.

Our business currently generates significant operating cash flow, which we use to fund acquisitions to grow our business and to service our substantial indebtedness. If, because of loss of revenue, pressure on pricing from customers, increases in our costs (including increases in costs related to servicing our indebtedness or labor costs), general economic, financial, competitive, legislative, regulatory conditions or other factors, including any acceleration of the foregoing as a result of the COVID-19 pandemic, many of which are outside of our control our business generates less operating cash flow, we may not have sufficient funds to grow our business or to service our indebtedness.

If we are unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants in the agreements governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the lenders under our

 

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credit facilities could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our credit agreements to avoid being in default. If we or any of our subsidiaries breach the covenants under our credit agreements and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under our credit agreements, the lenders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation.

Prior to the completion of the Transactions, our existing debt obligations raise substantial doubt regarding our ability to continue as a going concern.

As further described in “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our First Lien Term Loan matures in July 2021. Our currently available liquidity plus the expected additional cash generated by operations prior to that maturity date will not be sufficient to pay such debt obligations prior to or at the maturity date without additional financing. This risk is further adversely impacted by the uncertainties and impacts of the COVID-19 pandemic, including with respect to our business and the debt markets generally. These conditions raise substantial doubt about our ability to continue as a going concern. However, we intend to refinance, including using the expected proceeds from the Transactions and in connection with the consummation of the Transactions, all of the $2.5 billion outstanding under the First Lien Term Loan.

Consolidation in the industries we serve could put pressure on the pricing of our services, which could adversely affect our business or our results of operations.

Consolidation in the consumer goods and retail industries we serve could reduce aggregate demand for our services in the future and could adversely affect our business or our results of operations. When companies merge, the services they previously purchased separately are often purchased by the combined entity, leading to the termination of relationships with certain service providers or demands for reduced fees and commissions. The combined company may also choose to insource certain functions that were historically outsourced, resulting in the termination of existing relationships with third-party service providers. While we attempt to mitigate the revenue impact of any consolidation by maintaining existing or winning new service arrangements with the combined companies, there can be no assurance as to the degree to which we will be able to do so as consolidation continues in the industries we serve. In addition, as a result of the COVID-19 pandemic and its impacts on the consumer goods and retail industries, the industries we serve have experienced and may continue to experience a greater degree of consolidation than they have historically, which has put additional pressure on our pricing and may put further pressure on our pricing in the future.

Consumer goods manufacturers and retailers may periodically review and change their sales, retail, marketing and technology programs and relationships to our detriment.

The consumer goods manufacturers and retailers to whom we provide our business solutions operate in highly competitive and rapidly changing environments. From time to time these parties may put their sales, retail,

marketing and technology programs and relationships up for competitive review, which may increase as a result of the COVID-19 pandemic and its impacts on the consumer goods manufacturers and retailer industries. We have occasionally lost accounts with significant clients as a result of these reviews in the past, and our clients are typically able to reduce or cancel current or future spending on our services on short notice for any reason. We believe that key competitive considerations for retaining existing and winning new accounts include our ability to develop solutions that meet the needs of these manufacturers and retailers in this environment, the quality and effectiveness of our services and our ability to operate efficiently. To the extent that we are not able to develop these solutions or to operate efficiently, we may not be able to retain key clients, and our business or results of operations may be adversely affected.

 

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Our largest clients generate a significant portion of our revenues.

Our three largest clients generated approximately 11% of our revenues in the fiscal year ended December 31, 2019 and approximately 12% of our revenues in the six months ended June 30, 2020. These clients are generally able to reduce or cancel spending on our services on short notice for any reason. A significant reduction in spending on our services by our largest clients, or the loss of one or more of our largest clients, if not replaced by new clients or an increase in business from existing clients, would adversely affect our business and results of operations. In addition, when large retailers suspend or discontinue in-store demonstration services, such as in response to the COVID-19 pandemic, our business and results of operations can be adversely affected.

The retail industry is evolving, and if we do not successfully develop and maintain relevant omni-channel services for our clients, our business and results of operations could be adversely impacted.

Historically, substantially all of our sales segment revenues were generated by sales and services that ultimately occurred in traditional retail stores. The retail industry is evolving, as demonstrated by Amazon’s acquisition of Whole Foods Market and Walmart’s acquisition of Jet.com. In addition, the COVID-19 pandemic has placed pressure on the traditional retail store model, including store closures, changes in consumer spending, and extensive health and safety risks and compliance requirements, If consumers continue to shift to purchase more products online and e-commerce continues to displace brick-and-mortar retail sales, there may be a decrease in the demand for certain of our services. Consumers are increasingly using computers, tablets, mobile phones and other devices to comparison shop, determine product availability and complete purchases online, a trend that has accelerated during the COVID-19 pandemic, and which may continue thereafter. Omni-channel retailing is rapidly evolving and we believe we will need to keep pace with the changing consumer expectations and new developments by our competitors.

While we continue to seek to develop effective omni-channel solutions for our clients that support both their e-commerce and traditional retail needs, there can be no assurances that these efforts will result in revenue gains sufficient to offset potential decreases associated with a decline in traditional retail sales or that we will be able to maintain our position as a leader in our industry. If we are unable to provide, improve or develop innovative digital services and solutions in a timely manner or at all, our business and results of operations could be adversely impacted.

We may be unable to adapt to significant technological change, which could adversely affect our business.

We operate in businesses that require sophisticated data collection, processing and software for analysis and insights. Some of the technologies supporting the industries we serve are changing rapidly, particularly as a result of the COVID-19 pandemic. We will be required to continue to adapt to changing technologies, either by developing and marketing new services or by enhancing our existing services, to meet client demand.

Moreover, the introduction of new services embodying new technologies, including automation of certain of our in-store services, and the emergence of new industry standards could render existing services obsolete. Our continued success will depend on our ability to adapt to changing technologies, manage and process increasing amounts of data and information and improve the performance, features and reliability of our existing services in response to changing client and industry demands. We may experience difficulties that could delay or prevent the successful design, development, testing, introduction or marketing of our services. New services or enhancements to existing services may not adequately meet the requirements of current and prospective clients or achieve market acceptance.

 

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Our ability to maintain our competitive position depends on our ability to attract and retain talented executives.

We believe that our continued success depends to a significant extent upon the efforts, abilities and relationships of our senior executives and the strength of our middle management team. Although we have entered into employment agreements with certain of our senior executives, each of them may terminate their employment with us at any time. The replacement of any of our senior executives likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives and could therefore have an adverse impact on our business. In addition, we do not carry any “key person” insurance policies that could offset potential loss of service under applicable circumstances. If we are unable to attract and retain a talented team of middle management executives, it may be difficult to maintain the expertise and industry relationships that our clients value, and they may terminate or reduce their relationship with us.

Client procurement and fee reduction strategies could put additional operational and financial pressure on our services or negatively impact our relationships or our financial results.

Many of our clients seek opportunities to reduce their costs through procurement strategies that reduce fees paid to third-party service providers. As a result, certain of our clients have sought, and may continue to seek, more aggressive terms from us, including with respect to pricing and payment terms. Such activities put operational and financial pressure on our business, which could limit the amounts we earn or delay the timing of our cash receipts. Such activities may also cause disputes with our clients or negatively impact our relationships or financial results. While we attempt to mitigate negative implications to client relationships and the revenue impact of any pricing pressure by aligning our revenues opportunity with satisfactory client outcomes, there can be no assurance as to the degree to which we will be able to do so successfully. Additionally, price concessions can lead to margin compression, which in turn could adversely affect our business or results of operations.

If we fail to offer high-quality customer support, our business and reputation may suffer.

High-quality education, training and customer support are important for successful marketing and sales and for the renewal of existing customers. Providing this education, training and support requires that our personnel who manage our online training resource or provide customer support have specific inbound experience domain knowledge and expertise, making it more difficult for us to hire qualified personnel and to scale up our support operations. The importance of high-quality customer support will increase as we expand our business and pursue new customers. If we do not help our customers use multiple applications and provide effective ongoing support, our ability to sell additional functionality and services to, or to retain, existing customers may suffer and our reputation with existing or potential customers may be harmed.

We may be adversely affected if clients reduce their outsourcing of sales and marketing functions.

Our business and growth strategies depend in large part on companies continuing to elect to outsource sales and marketing functions. Our clients and potential clients will outsource if they perceive that outsourcing may provide quality services at a lower overall cost and permit them to focus on their core business activities and have done so in the past. We cannot be certain that the industry trend to outsource will continue or not be reversed or that clients that have outsourced functions will not decide to perform these functions themselves. Unfavorable developments with respect to outsourcing could have a negative effect on our business and results of operations.

 

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We have identified material weaknesses in our internal control over financial reporting. If we are unable to effectively remediate any of these material weaknesses or if we fail to maintain proper and effective internal controls in the future, our ability to produce accurate and timely financial statements could be impaired, investors’ views of us could be harmed, and we could be subject to enforcement actions by the Securities and Exchange Commission.

On August 15, 2019, we concluded that our previously-issued audited consolidated financial statements and related notes as of and for the year ended December 31, 2018, should be restated to reflect the corrections of misstatements as a result of the Take 5 Matter. Specifically, we determined that revenues during the fiscal year ended December 31, 2018 attributable to the Take 5 business had been recognized for services for which performance obligations were not performed on behalf of clients of Take 5 and that inaccurate reports were made to Take 5 clients about those services. As a result of the inappropriate business and revenue recognition practices at Take 5, we also determined that the acquired assets and liabilities of Take 5 were not properly stated at fair value at the acquisition date. In addition, and unrelated to the Take 5 Matter, we corrected an error to the benefit from income taxes for the three months ended September 30, 2018 and December 31, 2018. The net impact of the errors in the provision for income taxes did not change the amount of the benefit from income taxes for the twelve months ended December 31, 2018.

In connection with our investigation into the Take 5 Matter and the other error corrections, we have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Specifically, we identified material weaknesses in the design and operating effectiveness of our risk assessment and information and communication processes which contributed to the following material weaknesses:

 

   

We determined that we did not design and maintain effective controls related to our due diligence procedures for potential acquisitions with respect to databases and information technology systems used to recognize revenue and determine the satisfaction of performance obligations. Specifically, internal controls were not designed and maintained to assess the risks associated with potential acquisitions and the need to perform due diligence as part of purchase accounting with respect to databases and information technology systems utilized to determine the satisfaction of performance obligations, and to communicate and evaluate the results of due diligence.

 

   

We determined that we did not design and maintain effective controls to establish an appropriate basis for reliance on data and information in our information technology systems used for revenue recognition in certain of our newly acquired businesses. Specifically, internal controls were not designed and maintained to ensure the completeness and accuracy of system generated reports used to verify the satisfaction of performance obligations.

 

   

We determined that we did not design and maintain effective controls related to information and communication specifically with respect to our whistleblower complaint process to properly investigate, communicate and resolve whistleblower complaints and allegations related to accounting or other misconduct in a timely manner, and with respect to communication with appropriate parties. Specifically, internal controls were not designed and maintained to ensure that individuals conducting investigations into allegations of accounting or other misconduct had the appropriate expertise and supervision, and that the results of the investigations have been communicated to the appropriate parties or that other transactions are communicated to the appropriate parties.

We evaluated these material weaknesses and the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. These material weaknesses resulted in misstatements in our previously issued annual and interim consolidated financial statements and resulted in the Restatement.

 

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Additionally, these material weaknesses could result in a misstatement of our consolidated financial statements or disclosures that would result in a material misstatement to our annual or interim financial statements that would not be prevented or detected.

We are in the process of designing and implementing measures to improve our internal control over financial reporting and remediate the material weaknesses. Our efforts include the following actions:

 

   

In order to validate more fully an acquisition target with databases and information technology systems used to recognize revenue and determine the satisfaction of performance obligations, we are designing and implementing policies and procedures to perform more robust risk assessment and due diligence procedures in connection with such potential acquisitions, including engaging third-party experts to evaluate such target companies’ databases or information technology, and enhancing the communication and evaluation of due diligence results, as appropriate.

 

   

We are enhancing our procedures related to the risk assessment, evaluation and completeness and accuracy of our internal reporting processes with respect to newly acquired businesses, including with respect to the completeness and accuracy of reports used to verify the satisfaction of performance obligations under client contracts and the accuracy of recognized revenues.

 

   

We are designing, enhancing and implementing procedures and policies to promote timely and proper risk assessment, investigation, resolution, communication and disclosure of any whistleblower complaints or reported allegations of accounting or other misconduct.

In addition, we are designing and implementing various controls, including additional policies, procedures and training, to enhance our disclosure committee process and communication of pertinent information to the appropriate parties in connection with the issuance or reissuance of our consolidated financial statements.

While we are designing and implementing measures to remediate our existing material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time. We can give no assurance that these measures will remediate any of the deficiencies in our internal control over financial reporting or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future. We are required to assess the effectiveness of our internal control over financial reporting, and engage our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. Further, any businesses that become subsidiaries of our consolidated company, and any other acquired businesses that become part of our consolidated company, will need to comply with the Sarbanes-Oxley Act and the rules and regulations subsequently implemented by the Securities and Exchange Commission, or the SEC. We will need to ensure that any consolidated company establishes and maintains effective disclosure controls as well as internal controls and procedures for financial reporting.

Our ability to successfully implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures, or controls, may cause our financial statements to be inaccurate, or cause delays in the preparation and finalization of our financial statements in a timely manner. In addition, even if we were to conclude, and our independent registered public accountants were to concur, that our internal control over financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, because of its inherent limitations, internal control over financial reporting may not prevent or detect fraud or misstatements. Any of these issues, in turn, could have a material adverse impact on trading prices for our securities, and could adversely affect our ability to access the capital markets.

 

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If we are unable to identify attractive acquisition targets, acquire them at attractive prices or successfully integrate the acquired businesses, we may be unsuccessful in growing our business.

A significant portion of our growth has been as a result of our acquisition of complementary businesses that grow our service offerings, expand our geographic reach and strengthen valuable relationships with clients. However, there can be no assurance that we will find attractive acquisition targets, that we will acquire them at attractive prices, that we will succeed at effectively managing the integration of acquired businesses into our existing operations or that such acquired businesses or technologies will be well received by our clients, potential clients or our investors. We could also encounter higher-than-expected earn-out payments, unforeseen transaction- and integration-related costs or delays or other circumstances such as disputes with or the loss of key or other personnel from acquired businesses, challenges or delays in integrating systems or technology of acquired businesses, a deterioration in our associate and client relationships, harm to our reputation with clients, interruptions in our business activities or unforeseen or higher-than-expected inherited liabilities. Many of these potential circumstances are outside of our control and any of them could result in increased costs, decreased revenue, decreased synergies or the diversion of management time and attention.

In order for us to continue to grow our business through acquisitions we will need to identify appropriate acquisition opportunities and acquire them at attractive prices. We may choose to pay cash, incur debt or issue equity securities to pay for any such acquisition. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. The sale of equity to finance any such acquisition could result in dilution to our stockholders.

An inability to hire, timely train and retain talented individuals for our workforce could slow our growth and adversely impact our ability to operate our business.

Our ability to meet our workforce needs, while controlling wage- and associate-related costs, is subject to numerous external factors, including the availability of talented persons in the workforce in the local markets in which we operate, prevailing unemployment rates and competitive wage rates in such markets. We may find that there is an insufficient number of qualified individuals to fill our associate positions with the qualifications we seek. Competition in these communities for qualified staff could require us to pay higher wages and provide greater benefits, especially if there is significant improvement in regional or national economic conditions. We must also train and, in some circumstances, certify these associates under our policies and practices and any applicable legal requirements. Any inability to hire, timely train or retain talented individuals may result in higher turnover and increased labor costs, and could compromise the quality of our service, all of which could adversely affect our business.

Our corporate culture has contributed to our success and, if we are unable to maintain it as we evolve, our business, operating results and financial condition could be harmed.

We believe our corporate culture has been a significant factor in our success. However, as our company evolves, including through acquisitions and the impacts of the COVID-19 pandemic, including working remotely and reductions in workforce, it may be difficult to maintain our culture, which could reduce our ability to innovate and operate effectively. The failure to maintain the key aspects of our culture as our organization evolves could result in decreased employee satisfaction, increased difficulty in attracting top talent, increased turnover and could compromise the quality of our client service, all of which are important to our success and to the effective execution of our business strategy. If we are unable to maintain our corporate culture as we evolve and execute our growth strategies, our business, operating results and financial condition could be harmed.

Our substantial indebtedness could adversely affect our financial health, restrict our activities, and affect our ability to meet our obligations.

We have a significant amount of indebtedness, and we will continue to have a significant amount of indebtedness following the Closing. As of June 30, 2020, we had total indebtedness of $3.3 billion, excluding

 

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debt issuance costs, with an additional $82.3 million of availability under our Revolving Credit Facility. Of our total indebtedness at June 30, 2020, $2.4 billion matures in 2021, $760.0 million matures in 2022, and the remaining balance is payable in periodic installments of $6.5 million each quarter plus interest through 2020. On a pro forma basis, after giving effect to the Transactions and assuming no borrowings in order to satisfy the Minimum Cash Condition following any redemptions by Conyers Park’s public stockholders in connection with the Merger, as of June 30, 2020, we would have had total indebtedness of $2.1 billion, excluding debt issuance costs, with an additional $400.0 million of availability under our New Revolving Credit Facility.

The terms of our debt facilities contain, and the New Senior Secured Credit Facilities will contain, customary covenants that restrict us from taking certain actions, such as incurring additional debt, permitting liens on pledged assets, making investments, making distributions to equity holders, prepaying junior debt, engaging in mergers or restructurings, and selling assets, among other things, which may restrict our ability to successfully execute on our business plan. For a more complete description of the covenants and material terms of the First Lien Credit Agreement, the Second Lien Credit Agreement, and the Revolving Credit Facility, please see “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Description of Credit Facilities” in this proxy statement.

Despite current indebtedness levels, we and our subsidiaries may still be able to incur additional indebtedness, which could increase the risks associated with our indebtedness.

We and our subsidiaries may be able to incur additional indebtedness in the future because the terms of our indebtedness do not, and the terms of the New Senior Secured Credit Facilities will not, fully prohibit us or our subsidiaries from doing so. Subject to covenant compliance and certain conditions, as of June 30, 2020, our indebtedness would have permitted additional borrowing, including additional borrowing up to $82.3 million under our Revolving Credit Facility, and, on a pro forma basis, after giving effect to the Transactions and assuming no borrowings in order to satisfy the Minimum Cash Condition following any redemptions by Conyers Park’s public stockholders in connection with the Merger, the New Revolving Credit Facility would have permitted additional borrowings of up to $400.0 million. In addition, we and our subsidiaries have, and will have, the ability to incur additional indebtedness as incremental facilities under our Credit Facilities and the New Senior Secured Credit Facilities. If new debt is added to our current debt levels and our subsidiaries’ current debt levels, the related risks that we and they now face could increase.

Failure to maintain our credit ratings could adversely affect our liquidity, capital position, ability to hedge certain financial risks, borrowing costs, and access to capital markets.

Our credit risk is evaluated by the major independent rating agencies, and such agencies have in the past downgraded, and could in the future downgrade, our ratings. Our credit rating may impact the interest rates on any future indebtedness. We cannot assure you that we will be able to maintain our current credit ratings, and any additional, actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under further review for a downgrade, may have a negative impact on our liquidity, capital position, ability to hedge certain financial risks, and access to capital markets.

Acquiring new clients and retaining existing clients depends on our ability to avoid or manage business conflicts among competing brands.

Our ability to acquire new clients and to retain existing clients, whether by expansion of our own operations or by an acquired business may in some cases be limited by the other parties’ perceptions of, or policies concerning, perceived competitive conflicts arising from our other relationships. Some of our contracts expressly restrict our ability to represent competitors of the counterparty. These perceived competitive conflicts may also become more challenging to avoid or manage as a result of continued consolidation in consumer goods and retail industries and our own acquisitions. If we are unable to avoid or manage business conflicts among competing

 

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manufacturers and retailers, we may be unable to acquire new clients or be forced to terminate existing client relationships, and in either case, our business and results of operations may be adversely affected.

We may encounter significant difficulties integrating acquired businesses.

The combination of any businesses is a complex, costly and time-consuming process. As a result, we have devoted, and will continue to devote, significant management attention and resources to integrating acquired businesses. The failure to meet the challenges involved in integrating two businesses and to realize the anticipated benefits of any acquisition could cause an interruption of, or a loss of momentum in, the activities of our combined business and could adversely affect our results of operations. The difficulties of combining acquired operations with our own include, among others:

 

   

the diversion of management attention to integration matters;

 

   

difficulties in integrating functional roles, processes and systems, including accounting systems;

 

   

challenges in conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures between the two companies;

 

   

difficulties in assimilating, attracting and retaining key personnel;

 

   

challenges in keeping existing clients and obtaining new clients;

 

   

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the transaction;

 

   

difficulties in managing the expanded operations of a significantly larger and more complex business;

 

   

contingent liabilities, including contingent tax liabilities or litigation, that may be larger than expected; and

 

   

potential unknown liabilities, adverse consequences or unforeseen increased expenses associated with an acquisition, including possible adverse tax consequences to the combined business pursuant to changes in applicable tax laws or regulations.

Many of these factors are outside of our control, and any one of them could result in increased costs, decreased expected revenues and diversion of management time and energy, which could adversely impact our business and results of operations. These difficulties have been enhanced further during the COVID-19 pandemic, which has increased the challenges related to successfully integrating our new acquisitions as a result of our office closures and work-from home policies, which may hinder assimilation of key personnel.

If we are not able to successfully integrate an acquisition, if we incur significantly greater costs related to the expected synergies than we anticipate or if activities related to the expected synergies have unintended consequences, our operating performance and financial results could be adversely affected.

Limitations, restrictions and business decisions involving our joint ventures and minority investments may adversely affect our growth and results of operations.

We have made substantial investments in joint ventures and minority investments and may use these and other similar methods to expand our service offerings and geographical coverage in the future. These arrangements typically involve other business services companies as partners that may be competitors of ours in certain markets. Joint venture agreements may place limitations or restrictions on our services. As part of our joint venture with, and investments in Smollan, we are restricted under certain circumstances from making direct acquisitions and otherwise expanding our service offerings into markets outside of North America and Europe. As a result of the Daymon Acquisition, pursuant to the terms of our arrangements with Smollan and our joint venture, Smollan and our joint venture may elect to purchase from us, and have purchased, certain Daymon

 

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business units that operate outside of North America. If Smollan or our joint venture do not elect to purchase those business units, we may, under certain circumstances, elect to retain, sell or discontinue those business units. The limitations and restrictions tied to our joint venture and minority investments limit our potential business opportunities and reduce the economic opportunity for certain prospective international investments and operations. Additionally, though we control our joint ventures, we may rely upon our equity partners or local management for operational and compliance matters associated with our joint ventures or minority investments. Moreover, our other equity partners and minority investments may have business interests, strategies or goals that are inconsistent with ours. Business decisions, including actions or omissions, of a joint venture or other equity partner or management for a business unit may adversely affect the value of our investment, result in litigation or regulatory action against us or adversely affect our growth and results of operations.

Our international operations expose us to risks that could impede growth in the future, and our attempts to grow our business internationally may not be successful.

We continue to explore opportunities in major international markets. International operations expose us to various additional risks that could adversely affect our business, including:

 

   

costs of customizing services for clients outside of the United States;

 

   

the burdens of complying with a wide variety of foreign laws;

 

   

potential difficulty in enforcing contracts;

 

   

being subject to U.S. laws and regulations governing international operations, including the U.S. Foreign Corrupt Practices Act and sanctions regimes;

 

   

being subject to foreign anti-bribery laws in the jurisdictions in which we operate, such as the UK Bribery Act;

 

   

reduced protection for intellectual property rights;

 

   

increased financial accounting and reporting complexity;

 

   

exposure to foreign currency exchange rate fluctuations;

 

   

exposure to local economic conditions;

 

   

limitations on the repatriation of funds or profits from foreign operations;

 

   

exposure to local political conditions, including adverse tax policies and civil unrest;

 

   

the risks of a natural disaster, public health crisis (including the occurrence of a contagious disease or illness, such as the coronavirus), an outbreak of war, the escalation of hostilities and acts of terrorism in the jurisdictions in which we operate; and

 

   

the disparate impact of the COVID-19 pandemic, including the measures taken to mitigate its spread, across various jurisdictions.

Additionally, in many countries outside of the United States, there has not been a historical practice of using third parties to provide sales and marketing services. Accordingly, while it is part of our strategy to expand into international markets, it may be difficult for us to grow our international business units on a timely basis, or at all.

 

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The economic effects of the United Kingdom’s withdrawal from the European Union, or “Brexit,” may affect relationships with existing and future customers and could have an adverse impact on our business and operating results.

The United Kingdom withdrew from the European Union on January 31, 2020, maintaining status quo arrangements through a transition period scheduled to end on December 31, 2020. The transition period will be used to negotiate future trade arrangements between the United Kingdom and the European Union. The consequences of the United Kingdom withdrawing from the European Union and the terms of the future trade agreements and other relationships with the European Union continue to be highly uncertain. Brexit could potentially disrupt the free movement of goods, services and people between the United Kingdom and the European Union, undermine bilateral cooperation in key geographic areas and significantly disrupt trade between the United Kingdom and the European Union or other nations as the United Kingdom pursues independent trade relations. Because this is an unprecedented event, it remains unclear what long-term economic, financial, trade and legal implications Brexit will have and how it will affect the regulation applicable to our business globally and in the region. The impact on us will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. Any of these developments, along with any political, economic and regulatory changes that may occur, could cause political and economic uncertainty in Europe and internationally and could adversely affect our sales in Europe. The impact on us from Brexit will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. Furthermore, declines of local currencies of our international customers relative to the U.S. dollar as a result of Brexit, the COVID-19 pandemic or otherwise may impair the purchasing power of our international customers and could cause international buyers to decrease their participation in our marketplaces, and our reported international sales and earnings could be reduced. Finally, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Union laws to replace or replicate, and those laws and regulations may be cumbersome, difficult or costly in terms of compliance. In addition, Brexit may lead other European Union member countries to consider referendums regarding their European Union membership. Any of these effects of Brexit, among others, could adversely affect our business, financial condition, operating results and cash flows.

We may be subject to unionization, work stoppages, slowdowns or increased labor costs.

Currently, none of our associates in the United States are represented by a union. However, our associates have the right under the National Labor Relations Act to choose union representation. If all or a significant number of our associates become unionized and the terms of any collective bargaining agreement were significantly different from our current compensation arrangements, it could increase our costs and adversely impact our profitability. Moreover, if a significant number of our associates participate in labor unions it could put us at increased risk of labor strikes and disruption of our operations or adversely affect our growth and results of operations. In December 2019, a union which commonly represents employees in the supermarket industry filed a petition with the National Labor Relations Board to represent approximately 120 employees who work in and around Boston. An election was held, and based on certified results of the election we prevailed in this election. Notwithstanding this successful election, we could face future union organization efforts or elections, which could lead to additional costs, distract management or otherwise harm our business.

If goodwill or other intangible assets in connection with our acquisitions become impaired, we could take significant non-cash charges against earnings.

We have made acquisitions to complement and expand the services we offer and intend to continue to do so when attractive acquisition opportunities exist in the market. As a result of prior acquisitions, including the 2014 Topco Acquisition and the Daymon Acquisition, we have goodwill and intangible assets recorded on our balance sheet of $2.2 billion and $2.5 billion, respectively, as of June 30, 2020, as further described in Note 5 to our condensed consolidated financial statements for the six months ended June 30, 2020. Under current accounting guidelines, we must assess, at least annually, whether the value of goodwill and other intangible assets has been impaired. For example, during the year ended December 31, 2018 and in connection with our annual impairment

 

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assessment of goodwill and intangible assets, we recognized non-cash goodwill and non-cash intangible asset impairment charges of $652.0 million and $580.0 million, respectively, in our sales reporting unit due to our revised future year earnings expectations, primarily related to a reduction in revenues in several of our in-store reset and merchandising programs in 2018.

We can make no assurances that we will not record any additional impairment charges in the future. Any future reduction or impairment of the value of goodwill or other intangible assets will similarly result in charges against earnings, which could adversely affect our reported financial results in future periods.

Failures in, or incidents involving, our technology infrastructure could damage our business, reputation and brand and substantially harm our business and results of operations.

Our business is highly dependent on our ability to manage operations and process a large number of transactions on a daily basis. We rely heavily on our operating, payroll, financial, accounting and other data processing systems which require substantial support, maintenance and cost to maintain, and may be subject to disabilities, errors, or other harms. If our data and network infrastructure were to fail, or if we were to suffer an interruption or degradation of services in our data center, third-party cloud, and other infrastructure environments, we could lose important data, which could harm our business. Our facilities, as well as the facilities of third-parties that maintain or have access to our data or network infrastructure, are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, cyber security attacks, terrorist attacks, power losses, telecommunications failures and similar events. In the event that our or any third-party provider’s systems or service abilities are hindered by any of the events discussed above, our ability to operate may be impaired. A decision to close facilities without adequate notice, or other unanticipated problems, could adversely impact our operations. Any of the aforementioned risks may be augmented if our or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate in preventing the loss of data, service interruptions, disruptions to our operations or damages to important systems or facilities. Our data center, third-party cloud, and managed service provider infrastructure also could be subject to break-ins, cyber-attacks, sabotage, intentional acts of vandalism and other misconduct, from a spectrum of actors ranging in sophistication from threats common to most industries to more advanced and persistent, highly organized adversaries. Any security breach, including personal data breaches, or incident, including cybersecurity incidents, that we experience could result in unauthorized access to, misuse of or unauthorized acquisition of our internal sensitive corporate data, such as financial data, intellectual property, or other competitively sensitive or confidential data. Such unauthorized access, misuse, acquisition, or modification of sensitive data may result in data loss, corruption or alteration, interruptions in our operations or damage to our computer hardware or systems or those of our employees, or customers. We have been the target of cyber-attacks involving the unauthorized breach or attempted breach of our systems. Although we have taken and continue to take steps to enhance our cybersecurity posture, we cannot assure that future cyber incidents will not occur or that our systems will not be targeted or breached in the future. Moreover, negative publicity arising from these types of disruptions could damage our reputation. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our service. Significant unavailability of our services due to attacks could cause users to cease using our services and materially and adversely affect our business, prospects, financial condition and results of operations.

We use complex software in our technology infrastructure, which we seek to continually update and improve. Replacing such systems is often time-consuming and expensive, and can also be intrusive to daily business operations. Further, we may not always be successful in executing these upgrades and improvements, which may occasionally result in a failure of our systems. We may experience periodic system interruptions from time to time. Any slowdown or failure of our underlying technology infrastructure could harm our business and reputation, which could materially adversely affect our results of operations. Our disaster recovery plan or those of our third-party providers may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.

 

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Failure to comply with federal, state and foreign laws and regulations relating to privacy, data protection and consumer protection, or the expansion of current or the enactment of new laws or regulations relating to privacy, data protection and consumer protection, could adversely affect our business and our financial condition.

A variety of federal, state and foreign laws and regulations govern the collection, use, retention, sharing and security of this information. The information, security and privacy requirements imposed by such governmental laws and regulations relating to privacy, data protection and consumer protection are increasingly demanding, are quickly evolving and are subject to potentially differing interpretations. These requirements may not be harmonized, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations. For example, the State of California adopted the California Consumer Protection Act of 2018 (“CCPA”), which became effective in 2020 and regulates the collection and use of consumers’ data. Compliance with the new obligations imposed by the CCPA depends in part on how particular regulators interpret and apply them. We are also subject to additional international privacy rules, many of which, such as the General Data Privacy Regulation, or GDPR, and national laws supplementing the GDPR, such as in the United Kingdom, are significantly more stringent than those currently enforced in the United States. The GDPR requires companies to meet stringent requirements regarding the handling of personal data of individuals located in the European Economic Area (the “EEA”). In addition, there are mandatory data breach notification requirements. The GDPR also includes significant penalties for noncompliance, which may result in monetary penalties of up to the higher of €20.0 million or 4% of a group’s worldwide turnover for the preceding financial year for the most serious violations. The GDPR and other similar regulations require companies to give specific types of notice and informed consent is required for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other purposes and for direct electronic marketing, and the GDPR also imposes additional conditions in order to satisfy such consent, such as a prohibition on pre-checked tick boxes and bundled consents. GDPR, CCPA and other similar laws and regulations, as well as any associated inquiries or investigations or any other government actions, may be costly to comply with, result in negative publicity, increase our operating costs, require significant management time and attention and subject us to remedies that may harm our business, including fines or demands or orders that we modify or cease existing business practices. Our systems may not be able to satisfy these changing requirements and manufacturer, retailer and associate expectations, or may require significant additional investments or time in order to do so.

We expect that new industry standards, laws and regulations will continue to be proposed regarding privacy, data protection and information security in many jurisdictions, including the European e-Privacy Regulation, which is currently in draft form. We cannot yet determine the impact such future laws, regulations and standards may have on our business. Complying with these evolving obligations is costly. For instance, expanding definitions and interpretations of what constitutes “personal data” (or the equivalent) within the United States, the EEA and elsewhere may increase our compliance costs and legal liability.

A significant data breach or any failure, or perceived failure, by us to comply with any federal, state or foreign privacy or consumer protection-related laws, regulations or other principles or orders to which we may be subject or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and may result in claims, investigations, proceedings or actions against us by governmental entities or others or other penalties or liabilities or require us to change our operations and/or cease using certain data sets. Depending on the nature of the information compromised, we may also have obligations to notify users, law enforcement or payment companies about the incident and may need to provide some form of remedy, such as refunds, for the individuals affected by the incident.

 

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The Take 5 Matter may lead to additional harms, risks and uncertainties for us, including litigation and governmental investigations, a reduction in revenue, a potential deterioration in our relationships or reputation and a loss in investor confidence.

As further described elsewhere in this proxy statement, we restated our previously issued audited consolidated financial statements for the year ended December 31, 2018 based on our determination that revenue during those periods attributable to the Take 5 business had been recognized for services for which performance obligations were not performed on behalf of clients of Take 5 and that inaccurate reports were made to Take 5 clients about those services. See “Advantage’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Take 5 Matter” and “Information about Advantage — Legal Proceedings.”

As a result of these matters, we may be subject to a number of additional harms, risks and uncertainties, including substantial unanticipated costs for accounting and legal fees in connection with or related to the Restatement, potential lawsuits by clients or other interested parties who claim to have been harmed by the misconduct at Take 5, other costs and fees related to the Take 5 Matter (in excess of the amounts already being offered as refunds), potential governmental investigations arising from the Take 5 Matter, a reduction in our current and anticipated revenue and a potential deterioration in our associate and client relationships or our reputation. In addition, if we do not prevail in any litigation or governmental investigation related to these matters, we could be subject to costs related to such litigation or governmental investigation, including equitable relief, civil monetary damages, treble damages, repayment or criminal penalties, which may not be covered by insurance or may materially increase our insurance costs. We have incurred and will continue to incur additional substantial defense and investigation costs regardless of the outcome of any such litigation or governmental investigation. In addition, there can be no assurance to what degree, if any, we will be able to recover any such costs or damages from the former owners of Take 5 or whether such former owners of Take 5 engaged in further unknown improper activities that may subject us to further costs or damages, including potential reputational harm. Likewise, such events have caused and may cause further diversion of our management’s time and attention. Any adverse outcome related to these matters cannot be predicted at this time, and may materially harm our business, reputation and/or financial condition, or the trading price of our securities.

Our business is seasonal in nature and quarterly operating results can fluctuate.

Our services are seasonal in nature, with the fourth fiscal quarter typically generating a higher proportion of our revenues than other fiscal quarters. Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation disruptions, public health crises (including the COVID-19 pandemic) or unanticipated adverse weather, could result in lower-than-planned sales during key revenue-producing seasons. For example, frequent or unusually heavy snowfall, ice storms, rainstorms, windstorms or other extreme weather conditions over a prolonged period could make it difficult for consumers to travel to retail stores or foodservice locations. Such events could lead to lower revenues, negatively impacting our financial condition and results of operations.

Our business is competitive, and increased competition could adversely affect our business and results of operations.

The sales, marketing and merchandising services industry is competitive. We face competition from a few other large, national or super-regional agencies as well as many niche and regional agencies. Remaining competitive in this industry requires that we closely monitor and respond to trends in all industry sectors. We cannot assure you that we will be able to anticipate and respond successfully to such trends in a timely manner. Moreover, some of our competitors may choose to sell services competitive to ours at lower prices by accepting lower margins and profitability or may be able to sell services competitive to ours at lower prices due to proprietary ownership of data or technical superiority, which could negatively impact the rates that we can charge. If we are unable to compete successfully, it could have a material adverse effect on our business, financial condition and our results of operations. If certain competitors were to combine into integrated sales,

 

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marketing and merchandising services companies, additional sales, marketing and merchandising service companies were to enter the market or existing participants in this industry were to become more competitive, including through technological innovation such as social media and crowdsourcing, it could have a material adverse effect on our business, financial condition or our results of operations.

Our business and financial results may be affected by various litigation and regulatory proceedings.

We are subject to litigation and regulatory proceedings in the normal course of business and could become subject to additional claims in the future. These proceedings have included, and in the future may include, matters involving personnel and employment issues, workers’ compensation, personal and property injury, disputes relating to acquisitions (including contingent consideration), governmental investigations and other proceedings. Some historical and current legal proceedings and future legal proceedings may purport to be brought as class actions on behalf of similarly situated parties including with respect to employment-related matters. We cannot be certain of the ultimate outcomes of any such claims, and resolution of these types of matters against us may result in significant fines, judgments or settlements, which, if uninsured, or if the fines, judgments and settlements exceed insured levels, could adversely affect our business or financial results. See “Information about Advantage — Legal Proceedings.”

Damage to our reputation could negatively impact our business and results of operations.

Our reputation and the quality of our brand are critical to our business and success in existing markets and will be critical to our success as we enter new markets. We believe that we have built our reputation on the high quality of our sales and marketing services, our commitment to our clients and our performance-based culture, and we must protect and grow the value of our brand in order for us to continue to be successful. Any incident that erodes client loyalty for our brand could significantly reduce its value and damage our business.

Also, there has been a marked increase in the use of social media platforms and similar devices, including weblogs (blogs), social media websites, Twitter and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. Information concerning us may be posted on such platforms at any time. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity for redress or correction.

We are subject to many federal, state, local and international laws with which compliance is both costly and complex.

Our business is subject to various, and sometimes complex, laws and regulations, including those that have been or may be implemented in response to the COVID-19 pandemic. In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state, local and international governmental authorities. We may incur substantial costs in order to maintain compliance with these existing laws and regulations. In addition, our costs of compliance may increase if existing laws and regulations are revised or reinterpreted or if new laws and regulations become applicable to our operations. These costs could have an adverse impact on our business or results of operations. Moreover, our failure to comply with these laws and regulations, as interpreted and enforced, could lead to fines, penalties or management distraction or otherwise harm our business.

We rely on third parties to provide certain data and services in connection with the provision of our services.

We rely on third parties to provide certain data and services for use in connection with the provision of our services. For example, we contract with third parties to obtain the raw data on retail product sales and

 

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inventories. These suppliers of data may impose restrictions on our use of such data, fail to adhere to our quality control standards, increase the price they charge us for this data or refuse altogether to license the data to us. If we are unable to use such third-party data and services or if we are unable to contract with third parties, when necessary, our business, financial condition or our results of operations could be adversely affected. In the event that such data and services are unavailable for our use or the cost of acquiring such data and services increases, our business could be adversely affected.

We may not be able to adequately protect our intellectual property, which, in turn, could harm the value of our brands and adversely affect our business.

Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trade names, service marks, trademarks, proprietary products and other intellectual property, including our name and logos. We rely on U.S. and foreign trademark, copyright and trade secret laws, as well as license agreements, nondisclosure agreements and confidentiality and other contractual provisions to protect our intellectual property. Nevertheless, our competitors may develop similar business solutions and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and other intellectual property.

The success of our business depends on our continued ability to use our existing trademarks and service marks to increase brand awareness and further develop our brand in both domestic and international markets. We have registered and applied to register our trade names, service marks and trademarks in the United States and foreign jurisdictions. However, the steps we have taken to protect our intellectual property in the United States and in foreign countries may not be adequate, and third parties may misappropriate, dilute, infringe upon or otherwise harm the value of our intellectual property. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as the laws of the United States.

Third parties may also assert that we infringe, misappropriate or otherwise violate their intellectual property, particularly with respect to our digital solutions, and may sue us for intellectual property infringement. Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and other personnel may be diverted in pursuing these proceedings. If a court finds that we infringe a third party’s intellectual property, we may be required to pay damages or be subject to an injunction. With respect to any third-party intellectual property that we use or wish to use in our business (whether or not asserted against us in litigation), we may not be able to enter into licensing or other arrangements with the owner of such intellectual property at a reasonable cost or on reasonable terms.

Consumer goods manufacturers and retailers, including some of our clients, are subject to extensive governmental regulation and we and they may be subject to enforcement in the event of noncompliance with applicable requirements.

Consumer goods manufacturers and retailers, including some of our clients, are subject to a broad range of federal, state, local and international laws and regulations governing, among other things, the research, development, manufacture, distribution, marketing and post-market reporting of consumer products. These include laws administered by the U.S. Food and Drug Administration (the “FDA”), the U.S. Drug Enforcement Administration, the U.S. Federal Trade Commission, the U.S. Department of Agriculture and other federal, state, local and international regulatory authorities. For example, certain of our clients market and sell products containing cannabidiol (“CBD”). CBD products are subject to a number of federal, state, local and international laws and regulations restricting their use in certain categories of products and in certain jurisdictions. In particular, the FDA currently prohibits marketing of food, beverages or dietary supplements that contain CBD. These laws are broad in scope and subject to evolving interpretations, which could require us to incur costs associated with new or modified compliance requirements or require us or our clients to alter or limit our activities, including marketing and promotion, of such products, or to remove them from the market altogether.

 

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If a regulatory authority determines that we or our current or future clients have not complied with the applicable regulatory requirements, our business may be materially impacted and we or our clients could be subject to enforcement actions or loss of business. We cannot predict the nature of any future laws, regulations, interpretations or applications of the laws, nor can we determine what effect additional laws, regulations or administrative policies and procedures, if and when enacted, promulgated and implemented, could have on our business.

We may be subject to claims for products for which we are the vendor of record or may otherwise be in the chain of title.

For certain of our clients’ products, we become the vendor of record to the retailer or otherwise may be in the chain of title. For these products, we could be subject to potential claims for misbranded, adulterated, contaminated, damaged or spoiled products, or could be subject to liability in connection with claims related to infringement of intellectual property, product liability, product recalls or other liabilities arising in connection with the sale or marketing of these products. As a result, we could be subject to claims or lawsuits (including potential class action lawsuits), and we could incur liabilities that are not insured or exceed our insurance coverage or for which the manufacturer of the product does not indemnify us. Even if product claims against us are not successful or fully pursued, these claims could be costly and time consuming and may require our management to spend time defending the claims rather than operating our business.

A product that has been actually or allegedly misbranded, adulterated or damaged or is actually or allegedly defective could result in product withdrawals or recalls, destruction of product inventory, negative publicity and substantial costs of compliance or remediation. Any of these events, including a significant product liability judgment against us, could result in monetary damages and/or a loss of demand for our products, which could have an adverse effect on our business or results of operations.

Our insurance may not provide adequate levels of coverage against claims.

We believe that we maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Further, insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be adequate. If we are unable to obtain insurance at an acceptable cost or on acceptable terms, we could be exposed to significant losses.

We generate revenues and incur expenses throughout the world that are subject to exchange rate fluctuations, and our results of operations may suffer due to currency translations.

Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars, while our international operations earn revenues and incur expenses primarily in Canadian dollars, British pounds or euros. Because of currency exchange rate fluctuations, including possible devaluations, we are subject to currency translation exposure on the results of our operations, in addition to economic exposure. There has been, and may continue to be, volatility in currency exchange rates as a result of the United Kingdom’s withdrawal from the European Union, especially between the U.S. dollar and the British pound. These risks could adversely impact our business or results of operations.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our Credit Facilities are, and borrowings under the New Senior Secured Credit Facilities will be, at variable rates of interest and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. On a pro forma basis, assuming no other prepayments of our New Term Loan Facility

 

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and that our New Revolving Credit Facility is fully drawn (and to the extent that the London Interbank Offered Rate (“LIBOR”) is in excess of the 0.50% and 0.75% floors applicable to our New Revolving Credit Facility and New Term Loan Facility, respectively), each one-eighth percentage point change in interest rates would result in an approximately $2.5 million change in annual interest expense on the indebtedness under our New Senior Secured Credit Facilities. In the future, we may enter into interest rate swaps that involve the exchange of floating- for fixed-rate interest payments in order to reduce interest rate volatility or risk. However, we may not maintain interest rate swaps with respect to any of our variable rate indebtedness, and any swaps we enter into may not fully or effectively mitigate our interest rate risk.

We are subject to risks related to recent proposals for reform regarding LIBOR.

Certain of our financial arrangements, including our Credit Facilities, and the New Senior Secured Credit Facilities are made at, or will be made at, variable rates that use the London Interbank Offered Rate, or LIBOR (or metrics derived from or related to LIBOR), as a benchmark for establishing the interest rate. LIBOR is the subject of recent proposals for reform. On July 27, 2017, the United Kingdom’s Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021. These reforms may cause LIBOR to cease to exist, new methods of calculating LIBOR to be established or the establishment of an alternative reference rate(s). These consequences cannot be entirely predicted and could have an adverse impact on the market value for or value of LIBOR-linked securities, loans and other financial obligations or extensions of credit held by or due to us. Changes in market interest rates may influence our financing costs, returns on financial investments and the valuation of derivative contracts and could reduce our earnings and cash flows.

Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results.

We are subject to taxes by the U.S. federal, state, local and foreign tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions. We record tax expense based on our estimates of future payments, which may include reserves for uncertain tax positions in multiple tax jurisdictions, and valuation allowances related to certain net deferred tax assets. At any one time, many tax years may be subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these matters. We expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures are evaluated. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

   

changes in the valuation of our deferred tax assets and liabilities;

 

   

expected timing and amount of the release of any tax valuation allowance;

 

   

tax effects of equity-based compensation;

 

   

changes in tax laws, regulations or interpretations thereof; or

 

   

future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates.

In addition, our effective tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation allowance, deductibility of certain items or changes to existing accounting rules or regulations. Further, tax legislation may be enacted in the future which could negatively impact our current or future tax structure and effective tax rates. We may be subject to audits of our income, sales and other transaction taxes by U.S. federal, state, local and foreign taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

 

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Following the business combination, we will be controlled by the Advantage Sponsors and the Sponsor, whose economic and other interests in our business may be different from yours.

Upon the consummation of the Transactions, our authorized capital stock will consist of 3,290,000,000 shares of common stock and 10,000,000 shares of preferred stock, and, assuming no redemptions in connection with the business combination, the Advantage Sponsors, Topco and the Sponsor will collectively own 235,000,000 shares, or 71.21%, of our outstanding common stock and we will have no shares of preferred stock issued and outstanding. Subject to applicable law, the Advantage Sponsors, through their direct ownership of our common stock and their ownership of equity interests of Topco, and the Sponsor will be able to exert significant influence in the election of our directors and control actions to be taken by our stockholders, including amendments to the second amended and restated certificate of incorporation and approval of mergers, sales of substantially all of our assets, and other significant corporate transactions. It is possible that the interests of the Advantage Sponsors and the Sponsor may in some circumstances conflict with our interests and the interests of our other stockholders, including you.

Following the business combination, we will be a controlled company within the meaning of the NASDAQ listing requirements and as a result, will qualify for and intend to rely on exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements.

Because of the voting power over our company held by the Advantage Sponsors and Sponsor and the voting arrangement between such parties, we will be considered a controlled company for the purposes of the NASDAQ listing requirements. As such, we will be exempt from the corporate governance requirements that our board of directors, compensation committee, and nominating and corporate governance committee meet the standard of independence established by those corporate governance requirements. The independence standards are intended to ensure that directors who meet the independence standards are free of any conflicting interest that could influence their actions as directors.

Following the consummation of the business combination, we intend to utilize these exemptions afforded to a controlled company, though will not be required to do so. To the extent we utilize these exemptions, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.

We will incur increased costs as a result of becoming a public company.

As a public company, we will incur significant legal, accounting, insurance, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC. The expenses incurred by public companies for reporting and corporate governance purposes generally have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. In estimating these costs, we took into account expenses related to insurance, legal, accounting, and compliance activities, as well as other expenses not currently incurred. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on our board committees, or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, and other regulatory action and potentially civil litigation.

 

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The anti-takeover provisions of the second amended and restated certificate of incorporation and amended and proposed bylaws could prevent or delay a change in control of us, even if such change in control would be beneficial to our stockholders.

Provisions of the second amended and restated certificate of incorporation and amended and proposed bylaws, as well as provisions of Delaware law, could discourage, delay, or prevent a merger, acquisition, or other change in control of us, even if such change in control would be beneficial to our stockholders. These include:

 

   

authorizing the issuance of “blank check” preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt;

 

   

provision for a classified board of directors so that not all members of our board of directors are elected at one time;

 

   

not permitting the use of cumulative voting for the election of directors;

 

   

on and after the date on which we cease to be a “controlled company” within the meaning of the NASDAQ listing requirements:

 

   

permitting the removal of directors only for cause;

 

   

limiting the ability of stockholders to call special meetings;

 

   

requiring all stockholder actions to be taken at a meeting of our stockholders; and

 

   

requiring approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend, or repeal the proposed bylaws or repeal the provisions of the second amended and restated certificate of incorporation regarding the election and removal of directors; and

 

   

establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

In addition, although we have opted out of Section 203 of the Delaware General Corporation Law, or DGCL, the second amended and restated certificate of incorporation will contain similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, subject to certain exceptions. Generally, a “business combination” includes a merger, asset, or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our outstanding voting stock.

Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with us for a three-year period. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.

Moreover, the second amended and restated certificate of incorporation provide that Topco and its affiliates (including the Advantage Sponsors) do not constitute “interested stockholders” for purposes of this provision, and thus any business combination transaction between us and Topco and its affiliates would not be subject to the protections otherwise provided by this provision. See “Description of Securities.” Topco and its affiliates are not prohibited from selling a controlling interest in us to a third party and may do so without your approval and without providing for a purchase of your shares of common stock, subject to the lock-up restrictions applicable to Topco. Accordingly, your shares of common stock may be worth less than they would be if Topco and its affiliates did not maintain voting control over us.

For additional information about our relationship with Topco and its affiliates, please see “Certain Relationships and Related Person Transactions” elsewhere in this proxy statement.

 

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The provisions of the second amended and restated certificate of incorporation and amended and proposed bylaws requiring exclusive venue in the Court of Chancery in the State of Delaware or the federal district courts of the United States of America for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.

The second amended and restated certificate of incorporation and proposed bylaws would require, to the fullest extent permitted by law, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the DGCL or the second amended and restated certificate of incorporation or the proposed bylaws, or (iv) any action asserting a claim against us governed by the internal affairs doctrine will have to be brought only in the Court of Chancery in the State of Delaware (or the federal district court for the District of Delaware or other state courts of the State of Delaware if the Court of Chancery in the State of Delaware does not have jurisdiction). The second amended and restated certificate of incorporation and the proposed bylaws would also require that the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision, and investors cannot waive compliance with federal securties laws and the rules and regulations thereunder. Although we believe these provisions benefit us by providing increased consistency in the application of applicable law in the types of lawsuits to which they apply, the provisions may have the effect of discouraging lawsuits against our directors and officers. These provisions would not apply to any suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction.

Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends on our common stock will be at the discretion of our board of directors and will depend upon our results of operations, financial condition, capital requirements, and other factors that our board of directors deems relevant. The payment of cash dividends is also restricted under the terms of the agreements governing our debt and our ability to pay dividend may also be restricted by the terms of any future credit agreement or any securities we or our subsidiaries may issue. See “Price Range of Securities and Dividends — Dividend Policy.”

Following the consummation of the business combination, an active, liquid trading market for our common stock and warrants may not develop.

Prior to the consummation of the business combination, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on NASDAQ or otherwise following the consummation of the business combination or how active and liquid that market may become. If an active and liquid trading market does not develop, you may have difficulty selling any of our common stock. Among other things, in the absence of a liquid public trading market:

 

   

you may not be able to liquidate your investment in shares of the Conyers Park Class A common stock;

 

   

you may not be able to resell your shares of the Conyers Park Class A common stock at or above the price attributed to them in the business combination;

 

   

the market price of shares of the Conyers Park Class A common stock may experience significant price volatility; and

 

   

there may be less efficiency in carrying out your purchase and sale orders.

 

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The trading price of our common stock and warrants may be volatile or may decline regardless of our operating performance.

After the consummation of the business combination, the market prices for our common stock and warrants are likely to be volatile and may fluctuate significantly in response to a number of factors, most of which we cannot control, including:

 

   

quarterly variations in our operating results compared to market expectations;

 

   

changes in preferences of our clients;

 

   

announcements of new products or services or significant price reductions;

 

   

size of our public float;

 

   

fluctuations in stock market prices and volumes;

 

   

defaults on our indebtedness;

 

   

changes in senior management or key personnel;

 

   

the granting, vesting, or exercise of employee stock options, restricted stock, or other equity rights;

 

   

the payment of any dividends thereon in shares of our common stock;

 

   

changes in financial estimates or recommendations by securities analysts;

 

   

negative earnings or other announcements by us;

 

   

further downgrades in our credit ratings;

 

   

material litigation or governmental investigations;

 

   

issuances of capital stock;

 

   

global economic, legal, and regulatory factors unrelated to our performance, including the COVID-19 pandemic; or

 

   

the realization of any risks described in this proxy statement under “Risk Factors.”

In addition, in the past, stockholders have instituted securities class action litigation against companies following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our common stock, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not currently have and may never obtain research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our stock could be negatively affected. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease to cover our common stock, we could lose visibility in the market for our stock, which in turn could cause our common stock price to decline.

Substantial future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

Sales of substantial amounts of our common stock in the public market after the consummation of the business combination, or the perception that these sales could occur, could adversely affect the price of our

 

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common stock and could impair our ability to raise capital through the sale of additional shares. Certain shares of our common stock will be freely tradable following the consummation of the business combination without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by our directors, executive officers, and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. Topco, the Advantage Sponsors, the Sponsor and members of our management have rights, subject to certain conditions, to require us to file registration statements covering Topco’s shares of our common stock or to include shares in registration statements that we may file for ourselves or other stockholders. See “Certain Relationships and Related Person Transactions — Registration Rights Agreement.” The Subscription Agreements also require that we file one or more registration statements covering the resale of the shares purchased by the PIPE Investors.

Following the expiration of the period covered by, or the waiver of the, lock-up agreement between Topco, the Advantage Sponsors and the Sponsor entered into in connection with the business combination, those parties will have the right to sell or distribute the shares of our common stock they hold. Those shares may be sold in the public market subject to applicable restrictions under the federal securities laws, including the limitations under Rule 144 of the Securities Act (particularly those applicable to our directors, officers, and affiliates, which restrict the manner and volume of shares that may be sold). Those shares may also be sold in registered offerings pursuant to the registration rights described elsewhere in this proxy statement. Any such sales, including sales of a substantial number of shares or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A common stock. We may also issue shares of our common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise. Any such issuance could result in ownership dilution to you as a stockholder and cause the trading price of our common stock to decline.

Risks Related to Conyers Park and the Business Combination

Except where noted or the context otherwise requires, as used in this subsection, the terms “we,” “us,” “our,” “our company,” “our business” and similar terms refer to Conyers Park.

The Sponsor and the Insiders have agreed to vote in favor of the business combination, regardless of how Conyers Park’s public stockholders vote.

The Sponsor and the Insiders have agreed to vote any shares of common stock owned by them in favor of the business combination proposal. As of the date of this proxy statement, the Sponsor and the Insiders own shares equal to approximately 20% of Conyers Park’s issued and outstanding shares of common stock. Accordingly, it is more likely that the necessary stockholder approval will be received for the business combination than would be the case if the Sponsor and the Insiders agreed to vote any shares of common stock owned by them in accordance with the majority of the votes cast by the public stockholders.

The Sponsor, certain members of the Conyers Park Board and certain Conyers Park officers have interests in the business combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the business combination proposal and approval of the other proposals described in this proxy statement.

When considering the Conyers Park Board’s recommendation that our stockholders vote in favor of the approval of the business combination proposal and the other proposals described in this proxy statement, our stockholders should be aware that the Sponsor and certain directors and officers of Conyers Park have interests in

 

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the business combination that may be different from, or in addition to, the interests of our stockholders generally. These interests include:

 

   

the fact that the Sponsor and the Insiders have agreed not to redeem any of the founder shares in connection with a stockholder vote to approve a proposed initial business combination;

 

   

the continued right of the Sponsor to hold Conyers Park Class A common stock and the shares of Conyers Park Class A common stock to be issued to the Sponsor upon exercise of its private placement warrants following the Transactions, subject to certain lock-up periods;

 

   

if the trust account is liquidated, including in the event we are unable to complete an initial business combination within the completion window, the Sponsor has agreed to indemnify us to ensure that the proceeds in the trust account are not reduced below $10.00 per public share, or such lesser per public share amount as is in the trust account on the liquidation date, by the claims of prospective target businesses with which we have entered into an acquisition agreement or claims of any third party (other than our independent public accountants) for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account;

 

   

the continued indemnification of our existing directors and officers and the continuation of our directors’ and officers’ liability insurance after the business combination;

 

   

the fact that the Sponsor, officers and directors will lose their entire investment in us and will not be reimbursed for any out-of-pocket expenses if an initial business combination is not consummated within the completion window;

 

   

the fact that the Sponsor and the Insiders have agreed to waive their rights to liquidating distributions from the trust account with respect to their founder shares if we fail to complete an initial business combination within the completion window;

 

   

the fact that the Sponsor paid an aggregate of approximately $11,000,000 for its 7,333,333 private placement warrants to purchase shares of Conyers Park Class A common stock and that such private placement warrants will expire and be worthless if a business combination is not consummated within the completion window; and

 

   

the fact that Conyers Park entered into the Stockholders Agreement with the parties named therein, which provides for, among other things, the right to designate directors to the Conyers Park Board

The personal and financial interests of our officers and directors may have influenced their motivation in identifying and selecting Advantage, completing a business combination with Advantage and may influence their operation of the post-combination company following the business combination. This risk may become more acute as the deadline of July 22, 2021 for completing an initial business combination nears.

The Conyers Park Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the Conyers Park stockholders that they vote “FOR” the proposals presented at the special meeting.

NASDAQ may not continue to list our securities, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Our common stock and public warrants are currently listed on NASDAQ and will be listed on NASDAQ upon consummation of the business combination. Our continued eligibility for listing may depend on, among other things, the number of public shares that are redeemed. There can be no assurance that Conyers Park will be able to comply with the continued listing standards of NASDAQ following the business combination. If, after the business combination, NASDAQ delists Conyers Park Common Stock from trading on its exchange for failure to

 

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meet the listing standards, Conyers Park’s stockholders could face significant material adverse consequences including:

 

   

a limited availability of market quotations for Conyers Park’s securities;

 

   

reduced liquidity for Conyers Park’s securities;

 

   

a determination that Conyers Park Common Stock is a “penny stock,” which would require brokers trading in such securities to adhere to more stringent rules, could adversely impact the value of Conyers Park’s securities and/or possibly result in a reduced level of trading activity in the secondary trading market for Conyers Park’s securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The Conyers Park Board did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination.

The Conyers Park Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Transactions. Accordingly, investors will be relying solely on the judgment of the Conyers Park Board in valuing Advantage’s business, and assuming the risk that the Conyers Park Board may not have properly valued such business. The lack of a third-party valuation or fairness opinion may also lead an increased number of stockholders to vote against the proposed business combination or demand redemption of their shares for cash, which could potentially impact Conyers Park’s ability to consummate the business combination.

Future resales of our outstanding shares, including the registration of sales for resale under the Registration Rights Agreement, may cause the market price of our securities to drop significantly, even if our business is doing well.

Conyers Park will have 330,000,000 shares of Class A common stock outstanding immediately following the consummation of the Transactions (assuming that no shares of Conyers Park Class A common stock are redeemed by Conyers Park stockholders) and excluding the Performance Shares, and there may be a large number of shares of Conyers Park Class A common stock sold in the market following the consummation of the business combination, or shortly thereafter.

Conyers Park, Topco and the Advantage Sponsors have entered into the Registration Agreement, pursuant to which, among other things, such stockholders will be entitled to customary registration rights following their respective lock-up periods. The sale or possibility of sale of these securities could have the effect of increasing the volatility in our share price or putting significant downward pressure on the price of our common stock.

The Sponsor is liable to ensure that proceeds of the trust are not reduced by vendor claims in the event a business combination is not consummated. It has also agreed to pay for any liquidation expenses if a business combination is not consummated. Such liability may have influenced the Sponsor’s decision to approve the Transactions.

If the Transactions or another business combination are not consummated by Conyers Park within the completion window, the Sponsor will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Conyers Park for services rendered or contracted for or products sold to Conyers Park. If Conyers Park consummates a business combination, including the Transactions, on the other hand, Conyers Park will instead be liable for all such claims. Please see the section entitled “Other Information Related to Conyers Park — Liquidation if no Business Combination” for further information. If Conyers Park is required to be liquidated and there are no funds remaining to pay the costs associated with the implementation and completion of such liquidation, the Sponsor has also agreed to advance Conyers Park the funds necessary to pay such costs and complete such liquidation (currently anticipated to be no more than approximately $100,000) and not to seek repayment for such expense.

 

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These obligations of the Sponsor may have influenced the Sponsor’s decision to approve the Transactions and to continue to pursue the business combination. In considering the recommendations of the Conyers Park Board to vote for the business combination proposal and the other proposals described in this proxy statement, Conyers Park’s stockholders should consider these interests.

The exercise of Conyers Park’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Transactions may result in a conflict of interest when determining whether such changes to the terms of the Transactions or waivers of conditions are appropriate and in Conyers Park’s stockholders’ best interest.

In the period leading up to the closing of the Transactions, events may occur that, pursuant to the Merger Agreement, would require Conyers Park to agree to amend the Merger Agreement, to consent to certain actions to be taken by Advantage or to waive rights that Conyers Park is entitled to under the Merger Agreement. Such events could arise because of changes in the course of Advantage’s business, a request by Advantage to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Advantage’s business and would entitle Conyers Park to terminate the Merger Agreement. In any of such circumstances, it would be at Conyers Park’s discretion, acting through the Conyers Park Board, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what such directors believe is best for Conyers Park and what he or they may believe is best for themselves in determining whether or not to take the requested action. As of the date of this proxy statement, Conyers Park does not believe there will be any material changes or waivers that Conyers Park’s directors and officers would be likely to make after the mailing of this proxy statement. To the extent required by law, Conyers Park will circulate a new or amended proxy statement or supplement thereto in the event there are any changes to the terms of the Merger Agreement or the Transactions that would have a material impact on its stockholders are required prior to the vote on the business combination proposal.

If Conyers Park is unable to complete the Transactions or another initial business combination by July 22, 2021 Conyers Park will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and the Conyers Park Board, dissolving and liquidating. In such event, third parties may bring claims against Conyers Park and, as a result, the proceeds held in the trust account could be reduced and the per-share liquidation price received by stockholders could be less than $10.00 per share.

Under the terms of Conyers Park’s current certificate of incorporation, Conyers Park must complete a business combination before the end of the completion window, or Conyers Park must cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and the Conyers Park Board, dissolving and liquidating. In such event, third parties may bring claims against Conyers Park. Although Conyers Park has obtained waiver agreements from certain vendors and service providers it has engaged and owes money to, and the prospective target businesses it has negotiated with, whereby such parties have waived any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they or other vendors who did not execute such waivers will not seek recourse against the trust account notwithstanding such agreements. Furthermore, there is no guarantee that a court will uphold the validity of such agreements. Accordingly, the proceeds held in the trust account could be subject to claims which could take priority over those of Conyers Park’s public stockholders. If Conyers Park is unable to complete a business combination within the completion window, the executive officers have agreed they will be personally liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by Conyers Park for services rendered or contracted for or products sold to Conyers Park. However, they may not be able to meet such obligation. Therefore, the per-share distribution amount from the trust account in such a situation may be less than $10.00 due to such claims.

 

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Additionally, if Conyers Park is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if Conyers Park otherwise enters compulsory or court supervised liquidation, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the trust account, Conyers Park may not be able to return to its public stockholders at least $10.00 per share.

Conyers Park’s stockholders may be held liable for claims by third parties against Conyers Park to the extent of distributions received by them.

If Conyers Park is unable to complete the Transactions or another business combination within the completion window, Conyers Park will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and the Conyers Park Board, dissolve and liquidate, subject (in the case of  (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Conyers Park cannot assure you that it will properly assess all claims that may be potentially brought against Conyers Park. As such, Conyers Park’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, Conyers Park cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by Conyers Park.

If Conyers Park is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by Conyers Park’s stockholders. Furthermore, because Conyers Park intends to distribute the proceeds held in the trust account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, the Conyers Park Board may be viewed as having breached their fiduciary duties to Conyers Park’s creditors and/or may have acted in bad faith, and thereby exposing itself and Conyers Park to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Conyers Park cannot assure you that claims will not be brought against it for these reasons.

Activities taken by existing Conyers Park stockholders to increase the likelihood of approval of the business combination proposal and the other proposals described in this proxy statement could have a depressive effect on Conyers Park’s stock.

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding Conyers Park or its securities, the Sponsor, directors, officers, advisors or any of their respective affiliates and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the business combination proposal, or execute agreements to purchase such shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of Conyers Park Common Stock or vote their shares in favor of the business combination proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Transactions where it appears that such requirements may otherwise not be met. Entering into any such arrangements may have a depressive effect on Conyers Park Common Stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than their market value and may therefore be more likely to sell the shares they own, either prior to or immediately after the special meeting.

 

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Conyers Park’s stockholders will experience immediate dilution as a consequence of, among other transactions, the issuance of Conyers Park Class A common stock as consideration in the business combination and the PIPE Investment. Having a minority share position may reduce the influence that Conyers Park’s current stockholders have on the management of Conyers Park.

It is anticipated that, upon completion of the business combination, assuming that no shares of Conyers Park Class A common stock are elected to be redeemed by Conyers Park stockholders, the concentration of ownership of Conyers Park immediately following the consummation of the business combination will be as follows:

 

     No Redemptions     Maximum Redemptions  
     Number of
Shares
     %
Ownership
    Number of
Shares
     %
Ownership
 

Ownership of Class A Common Stock

          

Topco(1)

     203,750,000        61.74     203,750,000        66.37

Conyers Park existing public stockholders

     45,000,000        13.64     —          0.00

PIPE Shares — Non-affiliated holders

     50,000,000        15.15     50,000,000        16.29

PIPE Shares — Advantage Sponsors or their affiliates and Sponsor

     20,000,000        6.06     41,987,300        13.68

Founder Shares — Sponsor and current Conyers Park directors(2)

     11,250,000        3.41     11,250,000        3.66
  

 

 

    

 

 

   

 

 

    

 

 

 

Total shares outstanding(1)(2)(3)

     330,000,000        100.00     306,987,300        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

 

(1) 

Excludes the 5,000,000 Performance Shares to be issued to Topco under the Merger Agreement, which will remain subject to vesting upon satisfaction of a market performance condition after the Closing, and until vesting Topco will not be able to vote or sell such shares.

(2) 

Includes 100,000 shares of Class B common stock held by current members of the Conyers Park board of directors.

(3) 

Excludes the outstanding 18,583,333 warrants to purchase Class A common stock, as such securities are not exercisable until 30 days after the Closing.

Having a minority ownership interest in New Advantage may reduce the influence that Conyers Park’s public stockholders have on the management of Conyers Park.

The Sponsor and the PIPE Investors will beneficially own a significant equity interest in Conyers Park and may take actions that conflict with your interests.

The interests of Sponsor and the PIPE Investors may not align with the interests of Conyers Park and its other stockholders. The Sponsor and the PIPE Investors are each in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with Conyers Park. The Sponsor and the PIPE Investors, and their respective affiliates, may also pursue acquisition opportunities that may be complementary to Conyers Park’s business and, as a result, those acquisition opportunities may not be available to us. Conyers Park’s second amended and restated certificate of incorporation provides that certain parties may engage in competitive businesses and renounces any entitlement to certain corporate opportunities offered to the private placement investors or any of their managers, officers, directors, equity holders, members, principals, affiliates and subsidiaries (other than Conyers Park and its subsidiaries) that are not expressly offered to them in their capacities as directors or officers of Conyers Park. The second amended and restated certificate of incorporation also provides that certain parties or any of their managers, officers, directors, equity holders, members, principals, affiliates and subsidiaries (other than Conyers Park and its subsidiaries), do not have any fiduciary duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as Conyers Park or any of its subsidiaries.

 

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We may issue additional shares of Conyers Park Class A common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares.

We may issue additional shares of Conyers Park Class A common stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or under our Incentive Plan, without stockholder approval, in a number of circumstances.

Our issuance of such additional shares of Conyers Park Class A common stock or other equity securities of equal or senior rank could have the following effects:

 

   

your proportionate ownership interest in Conyers Park will decrease;

 

   

the relative voting strength of each previously outstanding share of common stock may be diminished; or

 

   

the market price of our shares of Conyers Park stock may decline.

We have no operating history and our results of operations and those of New Advantage may differ significantly from the unaudited pro forma financial data included in this proxy statement.

Conyers Park is a blank check company with no operating history or results.

This proxy statement includes unaudited pro forma condensed combined financial statements for the post-combination company. The unaudited pro forma condensed combined statement of operations of the post-combination company combines the historical audited results of operations of Conyers Park for the year ended December 31, 2019 and the unaudited results of Conyers Park for the six months ended June 30, 2020, with the historical audited results of operations of Advantage for the year ended December 31, 2019 and the unaudited results of Advantage for the six months ended June 30, 2020 respectively, and gives pro forma effect to the Transactions as if they had been consummated on January 1, 2019. The unaudited pro forma condensed combined balance sheet of New Advantage combines the historical balance sheets of Conyers Park as of June 30, 2020 and of Advantage as of June 30, 2020 and gives pro forma effect to the business combination as if it had been consummated on June 30, 2020.

The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the business combination been consummated on the dates indicated above, or the future consolidated results of operations or financial position of New Advantage. Accordingly, New Advantage business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this document. For more information, please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

Advantage’s financial forecasts, which were presented to the Conyers Park Board and are included in this proxy statement, may not prove accurate.

In connection with the Transactions, Conyers Park management presented certain forecasted financial information for Advantage to the Conyers Park Board, which was internally prepared and provided by Advantage, and adjusted by Conyers Park management to take into consideration the consummation of the Transactions (assuming that no shares of Conyers Park Class A common stock are elected to be redeemed by Conyers Park stockholders), as well as certain adjustments that were appropriate in their judgment and experience. The forecasts were based on numerous variables and assumptions known to Advantage and Conyers Park at the time of preparation. Such variables and assumptions are inherently uncertain and many are beyond the control of Advantage or Conyers Park. Important factors that may affect actual results and cause the forecasts to

 

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not be achieved include, but are not limited to, risks and uncertainties relating to the businesses of Advantage (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, the competitive environment, changes in technology, general business and economic conditions. Various assumptions underlying the forecasts may prove to not have been, or may no longer be, accurate. The forecasts may not be realized, and actual results may be significantly higher or lower than projected in the forecasts. The forecasts also reflect assumptions as to certain business strategies or plans that are subject to change. As a result, the inclusion of such forecasts in this proxy statement should not be relied on as “guidance” or otherwise predictive of actual future events, and actual results may differ materially from the forecasts.

Conyers Park and Advantage have incurred and expect to incur significant costs associated with the business combination. Whether or not the business combination is completed, the incurrence of these costs will reduce the amount of cash available to be used for other corporate purposes by Conyers Park if the business combination is not completed.

Conyers Park and Advantage expect to incur significant costs associated with the business combination. Even if the business combination is not completed, Conyers Park expects to incur approximately $10,000,000 in expenses. These expenses will reduce the amount of cash available to be used for other corporate purposes by Conyers Park if the business combination is not completed.

Even if Conyers Park consummates the business combination, there is no guarantee that the public warrants will ever be “in the money,” and they may expire worthless and the terms of Conyers Park’s warrants may be amended.

The exercise price for Conyers Park public warrants is $11.50 per share of Conyers Park Class A common stock. There is no guarantee that the public warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.

If Conyers Park is unable to complete an initial business combination, Conyers Park’s warrants may expire worthless.

If Conyers Park is unable to complete an initial business combination, Conyers Park’s warrants may expire worthless.

Our ability to successfully effect the business combination and to be successful thereafter will be dependent upon the efforts of certain key personnel, including the key personnel of Advantage whom we expect to stay with the post-combination business following the business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business and its financial condition could suffer as a result.

Our ability to successfully effect the business combination and to be successful thereafter is dependent upon the efforts of our key personnel, including the key personnel of Advantage. Although some key personnel may remain with the post-combination business in senior management or advisory positions following the business combination, it is possible that we will lose some key personnel, the loss of which could negatively impact the operations and profitability of our post-combination business. Advantage’s success depends to a significant degree upon the continued contributions of senior management, certain of whom would be difficult to replace. Departure by certain of Advantage’s officers, be it upon or at some point following the consummation of the business combination, could have a material adverse effect on Advantage’s business, financial condition or operating results.

Conyers Park and Advantage will be subject to business uncertainties and contractual restrictions while the business combination is pending.

Uncertainty about the effect of the business combination on employees and third parties may have an adverse effect on Conyers Park and Advantage. These uncertainties may impair our or Advantage’s ability to

 

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retain and motivate key personnel and could cause third parties that deal with Advantage or Conyers Park or them to defer entering into contracts or making other decisions or seek to change existing business relationships. If key employees depart because of uncertainty about their future roles and the potential complexities of the business combination, our or Advantage’s business could be harmed.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.

We will be subject to income taxes in the United States, and our tax liabilities will be subject to the allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

   

changes in the valuation of our deferred tax assets and liabilities;