v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Accounting standards establish a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair values as
follows:
Level 1: Observable inputs such as quoted prices for identical assets in active markets;
Level 2: Inputs other than quoted prices for identical assets in active markets, that are observable either directly or
indirectly; and
Level 3: Unobservable inputs in which there is little or no market data which requires the use of valuation techniques and
the development of assumptions.
The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the
lowest level of input that is significant to the fair value measure in its entirety.
The carrying amount of financial assets and liabilities reported on the Consolidated Balance Sheets for commissions and
fees receivable – net, other current assets, accounts payable, short-term debt, and other accrued liabilities as of June 30,
2025 and December 31, 2024, approximate fair value because of the short-term duration of these instruments. The fair
value of long-term debt, including the Term Loan, Senior Secured Notes, the units subject to mandatory redemption, and
any current portion of such debt, was $3,293.6 million and $3,275.1 million as of June 30, 2025 and December 31, 2024,
respectively. The fair value of the Term Loan and Senior Secured Notes would be classified as Level 2 in the fair value
hierarchy and the units subject to mandatory redemption would be classified as Level 3. See Note 6, Debt, for the carrying
values of the Company’s debt.
Derivative Instruments
Deal-Contingent Foreign Currency Forward
The Company entered into the Deal-Contingent Forward to manage the risk of appreciation of the GBP-denominated
purchase price of the Castel acquisition. The fair value of the Deal-Contingent Forward was determined by comparing the
contractual foreign exchange rates to forward market rates for various future dates, probability weighted for when the
acquisition was anticipated to close, and discounted to the valuation date. The lowest level of inputs used that were
significant in determining the fair value were considered Level 3 inputs. See Note 10, Derivatives, for further information
on the Deal-Contingent Forward.
Interest Rate Cap
The Company uses an interest rate cap to manage its exposure to interest rate fluctuations related to the Company’s Term
Loan. The fair value of the interest rate cap is determined using the market standard methodology of discounting the future
expected cash receipts that would occur if variable interest rates rise above the strike rate of the cap. The variable interest
rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived
from observable market interest rate curves and volatilities. The inputs used in determining the fair value of the interest rate
cap are considered Level 2 inputs. See Note 10, Derivatives, for further information on the interest rate cap.
Contingent Consideration
The fair values of contingent consideration and contingently returnable consideration are based on the present value of the
future expected payments to be made to the sellers and to be received from the sellers, respectively, of certain acquired
businesses in accordance with the provisions outlined in the respective purchase agreements, which are Level 3 fair value
measurements. In determining fair value, the Company estimates cash payments and receipts based on management’s
financial projections of the performance of each acquired business relative to the formula specified by each purchase
agreement. The Company utilizes Monte Carlo simulations to evaluate financial projections of each acquired business. The
Monte Carlo models consider forecasted revenue and EBITDA and market risk-adjusted revenue and EBITDA, which are
run through a series of simulations. As of June 30, 2025, the models used risk-free rates, expected volatility, and a credit
spread that ranged from 1.9% to 4.4%, 6.9% to 26.1%, and 1.0% to 3.1%, respectively. As of December 31, 2024, the
models used risk-free rates, expected volatility, and a credit spread that ranged from 3.5% to 5.4%, 6.8% to 18.7%, and
0.7% to 2.6%, respectively. The Company discounts the expected payments created by the Monte Carlo model to present
value using a risk-adjusted rate that takes into consideration the market-based rates of return that reflect the ability of the
acquired entity to achieve its targets. The discount rate ranges used to present value the cash payments were 4.2% to 7.1%
and 5.0% to 6.6% as of June 30, 2025 and December 31, 2024, respectively.
Each period, the Company revalues the contingent consideration and contingently returnable consideration associated with
certain prior acquisitions to their fair value and records the related changes of the fair value in Change in contingent
consideration on the Consolidated Statements of Income. Changes in contingent consideration result from changes in the
assumptions regarding probabilities of successful achievement of related EBITDA and revenue milestones, the estimated
timing in which milestones are achieved, and the discount rate used to estimate the fair value of the liability. Contingent
consideration may change significantly as the Company’s revenue growth rate and EBITDA estimates evolve and
additional data is obtained, impacting the Company’s assumptions. The use of different assumptions and judgments could
result in a materially different estimate of fair value which may have a material impact on the results from operations and
financial position. See Note 3, Mergers and Acquisitions, for further information on contingent consideration.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring
basis by fair value hierarchy input level:
June 30, 2025
December 31, 2024
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets
Interest rate cap
$—
$7,013
$—
$—
$13,936
$—
Contingently returnable
consideration
—
—
5,340
—
—
5,483
Liabilities
Contingent consideration
—
—
114,627
—
—
129,059
Total assets and liabilities
measured at fair value
$—
$7,013
$119,967
$—
$13,936
$134,542
Contingently returnable consideration of $2.4 million and $1.3 million was recorded in Other current assets on the
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024, respectively. Contingently returnable
consideration of $2.9 million and $4.2 million was recorded in Other non-current assets on the Consolidated Balance
Sheets as of June 30, 2025 and December 31, 2024, respectively. Contingent consideration of $22.7 million and $48.2
million was recorded in Accounts payable and accrued liabilities on the Consolidated Balance Sheets as of June 30, 2025
and December 31, 2024, respectively. Contingent consideration of $91.9 million and $80.9 million was recorded in Other
non-current liabilities on the Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024, respectively.
Level 3 Assets and Liabilities Measured at Fair Value
The following is a reconciliation of the beginning and ending balances of the Level 3 assets and liabilities measured at fair
value:
Three Months Ended June 30,
Six Months Ended June 30,
2025
2024
2025
2024
Assets
Balance at beginning of period
$5,110
$—
$5,483
$—
Newly established assets due to acquisitions
—
4,868
—
4,868
Total gains (losses) included in earnings
(77)
—
1,277
—
Total gains included in OCI
307
—
507
—
Settlements
—
—
(1,927)
—
Balance at end of period
$5,340
$4,868
$5,340
$4,868
Liabilities
Balance at beginning of period
$96,333
$46,198
$129,059
$41,902
Newly established liabilities due to acquisitions
24,428
—
45,558
—
Total (gains) losses included in earnings
819
4,157
(9,537)
7,510
Total losses included in OCI
21
—
21
—
Settlements
(5,507)
(5,384)
(49,007)
(5,384)
Acquisition measurement period adjustments
(1,467)
—
(1,467)
943
Balance at end of period
$114,627
$44,971
$114,627
$44,971
For the six months ended June 30, 2025, the $1.9 million settlement of contingently returnable consideration is presented in
the financing section of the Consolidated Statements of Cash Flows. For the six months ended June 30, 2025, $19.4 million
and $29.3 million of contingent consideration settlements are presented in the operating and financing sections,
respectively, of the Consolidated Statements of Cash Flows. For the six months ended June 30, 2024, $5.4 million related
to the loss on the settlement of the Deal-Contingent Forward is presented in the operating section of the Consolidated
Statements of Cash Flows.