Risk factors disclosure for KLC education company's acquisition strategy

6. RISK FACTORS Investment in the Units involves a substantial degree of risk and should be regarded as speculative. Asa result, the purchase of the Units should be considered only by persons who can reasonably afford a loss of their entire investment. Prospective investors should carefully consider, in addition to matters set forth elsewhere in this Memorandum, the following factors relating to the business of the Company and this offering. The order in which risk factors appear is not intended as an indication of the relative weight or importance thereof. Prospective investors should carefully review all risk factors. Such information is presented as of the date hereof and is subject to change without notice. The discussion in this Memorandum contains forward-looking statements that involve risks and uncertainties. Actual results may differ significantly from the results discussed in the forward-locking statements. Factors that could cause or contribute to such differences include, but are not limited fo, those discussed below. The occurrence of any of these factors could materially and adversely affect the Company's results of operations or cash flow. Risks described herein that could affect KLC are also likely to be similar for other pre-K-12 businesses we may acquire or develop. Other businesses we acquire or develop in foreign countries or in different markets, may be subject to risks in addition to those discussed below. 6.4. Risks Related to Our Business 6.1.1 Risks associated with growth through acquisitions; potential inability to consummate transactions Aprincipal component of the Company's growth strategy is the acquisition of other businesses or interests therein that will complement and/or expand the Company's businesses and the products and services that they offer. The successful implementation of this strategy will depend upon a number of factors, including the ability to identify attractive acquisition opportunities, consummate such transactions on favorable terms and integrate the operations of the acquired businesses with those of the Company. Identifying, completing and realizing on attractive acquisitions are highly competitive and involves a high degree of uncertainty. The Company will be competing for acquisitions with other companies, private equity firms, as well as individuals and others, which often results in increased acquisition prices. There can be no assurance that the Company will be able to identify suitable acquisition opportunities or that if identified, the Company will be able to consummate such transactions on suitable terms, or that acquired businesses will perform as expected or generate returns. In addition to risks facing education companies similar to those facing KLC as described herein, acquisitions of businesses also involve special risks, including risks associated with unanticipated liabilities and contingencies, diversion of Company management attention and possible adverse effects on earnings resulting from increased amortization of goodwill, increased interest costs, the issuance of additional securities and difficulties related to the integration of the acquired business. No assurance can be given as to the success of the Company in executing and integrating acquisitions in the future. The Company's failure or inability to successfully implement and manage its acquisition strategy would have a material adverse effect on the Company's financial condition, results of operations and business. The Company may from time to time enter into negotiations in anticipation of consummating an acquisition transaction. However, there is no assurance that such negotiations will be successful and the diversion of management attention on such unsuccessful transactions may adversely affect management's ability to pursue other business opportunities. in addition, KLC PropCo intends to acquire diversified real estate interests, including investments in non- education related properties. The performance of this acquisition strategy in general, or of any particular property, cannot be predicted. 44 HOUSE_OVERSIGHT_024477