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Financial report summary
?Risks
- Risks Related to Proposed Merger
- Because the exchange ratio pursuant to the Merger Agreement is fixed and the market price of Goldman Sachs common stock has fluctuated and will continue to fluctuate, GreenSky stockholders cannot be sure of the value of the consideration they will receive upon completion of the Mergers or the value of the GreenSky Common Stock they will give up.
- The market price of Goldman Sachs common stock after the Mergers may be affected by factors different from those affecting the market price of GreenSky Class A Common Stock.
- After completion of the Mergers, Goldman Sachs may fail to realize the anticipated benefits of the Mergers, which could adversely affect the value of Goldman Sachs common stock.
- GreenSky may have difficulty attracting, motivating and retaining executives and other employees in light of the Mergers.
- Completion of the Mergers is subject to many conditions and if these conditions are not satisfied or waived, the Mergers will not be completed.
- In order to complete the Mergers, Goldman Sachs and GreenSky must obtain certain governmental authorizations, and if such authorizations are not granted or are granted with conditions to the parties, the closing of the Mergers may be jeopardized or the anticipated benefits of the Mergers could be reduced.
- GreenSky’s business relationships may be subject to disruption due to uncertainty associated with the Mergers.
- The Merger Agreement limits GreenSky’s ability to pursue alternatives to the Mergers and may discourage other companies from trying to acquire GreenSky for greater consideration than what Goldman Sachs has agreed to pay pursuant to the Merger Agreement.
- Failure to complete the Mergers could negatively impact the stock price and the future business and financial results of GreenSky.
- The shares of Goldman Sachs common stock to be received by GreenSky stockholders upon completion of the Mergers will have different rights from shares of GreenSky Common Stock.
- After the Mergers, GreenSky stockholders will have a significantly lower ownership and voting interest in Goldman Sachs than they currently have in GreenSky and will exercise less influence over management.
- Stockholder litigation could prevent or delay the completion of the Mergers or otherwise negatively impact the business and operations of Goldman Sachs and GreenSky.
- Goldman Sachs and GreenSky will incur significant costs in connection with the Mergers.
- The Mergers may not be accretive, and may be dilutive, to Goldman Sachs’s earnings per share, which may negatively affect the market price of Goldman Sachs common stock following completion of the Mergers.
- The future results of the combined company may be adversely impacted if the combined company does not effectively manage its expanded operations following completion of the Mergers.
- The global outbreak of the novel coronavirus, or COVID-19, initially caused severe disruptions in the U.S. economy and our business, and may further impact our performance and results of operations.
- Our agreements with our Bank Partners are non-exclusive, short term in duration and subject to termination by our Bank Partners upon the occurrence of certain events, including our failure to comply with applicable regulatory requirements. If such agreements expire or are terminated, and we are unable to replace the commitments of the expiring or terminating Bank Partners, our business would be adversely affected.
- Our results of operations and continued growth depend on our ability to retain existing, and attract new, merchants, Bank Partners, and other funding sources.
- A large percentage of our revenue is concentrated with our top ten merchants, and the loss of a significant merchant could have a negative impact on our operating results.
- Our results depend, to a significant extent, on the active and effective promotion and support of the GreenSky program by our Sponsors and merchants.
- If our merchants fail to fulfill their obligations to consumers or comply with applicable law, we may incur remediation costs.
- Prior to the COVID-19 pandemic, we experienced rapid growth, which if again experienced may be difficult to sustain and may place significant demands on our operational, administrative and financial resources.
- If we experience negative publicity, we may lose the confidence of our Bank Partners, other funding sources, merchants and consumers who use the GreenSky program and our business may suffer.
- We may be unable to successfully develop and commercialize new or enhanced products and services.
- Changes in market interest rates could have an adverse effect on our business.
- Increases in loan delinquencies and default rates in the GreenSky program could cause us to lose amounts we place in escrow and may require us to deploy resources to enhance our collections and default servicing capabilities, which could adversely affect our ability to maintain loan volumes, and could affect our ability to pursue or close alternative funding structures.
- We own participations in certain loans originated through the GreenSky program, and the non-performance, or even significant underperformance, of those participations would adversely affect our business.
- The replacement of London Interbank Offered Rate ("LIBOR") and replacement or reform of other interest rate benchmarks could adversely affect our results of operations and financial condition.
- We are subject to certain additional risks in connection with promotional financing offered through the GreenSky program.
- Fraudulent activity could negatively impact our business and could cause our Bank Partners to be less willing to originate loans as part of the GreenSky program.
- Misconduct and errors by our employees and third-party service providers could harm our business and reputation.
- If the credit decisioning, pricing, loss forecasting and credit scoring models we use contain errors, do not adequately assess risk or are otherwise ineffective, our reputation and relationships with our Bank Partners, other funding sources, our merchants and consumers could be harmed.
- We depend on the accuracy and completeness of information about customers of our merchants, and any misrepresented information could adversely affect our business.
- The consumer finance and payments industry is highly competitive and is likely to become more competitive, and our inability to compete successfully or maintain or improve our market share and margins could adversely affect our business.
- Our revenue is impacted, to a significant extent, by the general economy and the financial performance of our merchants.
- Because our business is heavily concentrated on consumer lending and payments in the U.S. home improvement industry, our results are more susceptible to fluctuations in that market than the results of a more diversified company would be.
- As part of our elective healthcare vertical we face some factors that differ from our home improvement vertical, and the unique considerations of this industry vertical, and our failure to comply with applicable regulations, or accurately forecast demand or growth could have an adverse effect on our business.
- We may in the future expand into new industry verticals, and our failure to mitigate specific regulatory, credit, and other risks associated with a new industry vertical could have an adverse effect on our business.
- The Amended Credit Agreement that governs our term loan and revolving loan facility contains various covenants that could limit our ability to engage in activities that may be in our best long-term interests.
- The Warehouse Facility contains various covenants that could limit our ability to engage in activities that may be in our best long-term interests.
- We may incur losses on interest rate swap and hedging arrangements.
- To the extent that we seek to grow through future acquisitions, or other strategic investments or alliances, we may not be able to do so effectively.
- Legal and Regulatory Risks
- We are subject to federal and state consumer protection laws.
- Our industry is highly regulated and is undergoing regulatory transformation, which has created inherent uncertainty. Changing federal, state and local laws, as well as changing regulatory enforcement policies and priorities, may negatively impact our business.
- The highly regulated environment in which our Bank Partners operate could have an adverse effect on our business.
- We are subject to regulatory examinations and investigations and may incur fines, penalties and increased costs that could negatively impact our business.
- The CFPB is a relatively new agency, and there continues to be uncertainty as to how its actions will impact our business; the agency’s actions have had, and may continue to have, an adverse impact on our business.
- The contours of the Dodd-Frank UDAAP standard are still uncertain and there is a risk that certain features of the GreenSky program loans could be deemed to violate the UDAAP standard.
- Our vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services that are important to our operations could have an adverse effect on our business.
- Litigation, regulatory actions and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses.
- Regulatory agencies and consumer advocacy groups are becoming more aggressive in asserting “disparate impact” claims.
- Our use of third-party vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention.
- We are subject to numerous laws and regulations related to privacy, data protection and information security. Our actual or perceived failure to comply with such obligations could harm our business, and changes in such regulations or laws could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities, marketing, market research or advertising practices.
- Future non-compliance with Payment Card Industry Data Security Standards (“PCI DSS”) may subject us to fines, penalties and civil liability and may result in the loss of our ability to settle on credit card networks.
- The increased scrutiny of third-party medical financing by governmental agencies may lead to increased regulatory burdens and may adversely affect our business.
- In recent years, federal regulators and the United States DOJ have increased their focus on enforcing the SCRA against servicers. Similarly, state legislatures have taken steps to strengthen their own state-specific versions of the SCRA.
- Anti-money laundering and anti-terrorism financing laws could have significant adverse consequences for us.
- We may be unable to sufficiently protect our proprietary rights and may encounter disputes from time to time relating to our use of the intellectual property of third parties.
- If we were found to be operating without having obtained necessary state or local licenses, it could adversely affect our business.
- If loans originated through the GreenSky program are found to violate applicable state usury laws or other lending laws, it could adversely affect our business.
- FDIC receivership or conservatorship of the Bank Partner that issues loan participations could adversely affect our business.
- Information Technology and Security Risks
- Cyber-attacks and other security breaches could have an adverse effect on our business.
- Disruptions in the operation of our computer systems and third-party data centers could have an adverse effect on our business.
- Some aspects of our platform include open source software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect our business.
- Legal Organization and Capital Structure Risks
- We are a holding company with no operations of our own and, as such, depend on our subsidiaries for cash to fund all of our operations and expenses, including future dividend payments, if any.
- We may be required to pay additional taxes as a result of an IRS audit of GS Holdings.
- The owners of the Class B common stock, who also are the Continuing LLC Members, control us and their interests may conflict with yours in the future.
- We will be required to pay for certain tax benefits we may claim arising in connection with the merger of the Former Corporate Investors, our purchase of Holdco Units and future exchanges of Holdco Units under the Exchange Agreement, which payments could be substantial.
- In certain circumstances, including certain changes of control of our Company, payments by us under the TRA may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRA.
- If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), as a result of our ownership of GS Holdings and GSLLC, applicable restrictions could make it impractical for us to continue our business as currently contemplated and could have an adverse effect on our business.
- Our certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to bring a claim in a judicial forum that they find more favorable for disputes with us or our directors, officers, employees or stockholders.
- Class A Common Stock Risks
- An active trading market for our Class A common stock may not be sustained, which may make it difficult to sell shares of Class A common stock.
- The market price of our Class A common stock has been and will likely continue to be volatile.
- Failure to comply with the requirements to design, implement and maintain effective internal controls could have an adverse effect on our business and stock price.
- Current owners of Class A common stock may be diluted by the future issuance of additional Class A common stock in connection with our incentive plans, acquisitions or otherwise.
- Because we have no current plans to pay cash dividends on our Class A common stock, you may not receive any return on investment unless you sell your Class A common stock for a price greater than that which you paid for it.
- Future offerings of debt or equity securities by us may adversely affect the market price of our Class A common stock.
- Future sales, or the expectation of future sales, of shares of our Class A common stock, including sales by Continuing LLC Members, could cause the market price of our Class A common stock to decline.
- Our capital structure may have a negative impact on our stock price.
- Certain provisions of our certificate of incorporation and bylaws could hinder, delay or prevent a change in control of us, which could adversely affect the price of our Class A common stock.
- If securities and industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
- The loss of the services of our senior management could adversely affect our business.
- Our business would suffer if we fail to attract and retain highly-skilled employees.
- Our risk management processes and procedures may not be effective.
- If assumptions or estimates we use in preparing our financial statements are incorrect or are required to change, our reported results of operations and financial condition may be adversely affected.
- Future changes in financial accounting standards may significantly change our reported results of operations.