v3.26.1
Fair Value Disclosures
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Disclosures

NOTE 12. Fair Value Disclosures

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include Level 1, Level 2 and Level 3.

Level 1 is defined as observable inputs such as quoted prices in active markets for identical assets;

Level 2 is defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 is defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table represents the fair value of the financial instruments measured at fair value on a recurring basis:

 

 

 

As of June 30, 2026

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents*

 

$

265,763

 

 

$

—

 

 

$

—

 

 

$

265,763

 

Total assets measured at fair value

 

$

265,763

 

 

$

—

 

 

$

—

 

 

$

265,763

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related liabilities

 

$

—

 

 

$

—

 

 

$

50,905

 

 

$

50,905

 

Total liabilities measured at fair value

 

$

—

 

 

$

—

 

 

$

50,905

 

 

$

50,905

 

 

 

As of December 31, 2025

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents*

 

$

275,401

 

 

$

—

 

 

$

—

 

 

$

275,401

 

Total assets measured at fair value

 

$

275,401

 

 

$

—

 

 

$

—

 

 

$

275,401

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition-related liabilities

 

$

—

 

 

$

—

 

 

$

188,483

 

 

$

188,483

 

Total liabilities measured at fair value

 

$

—

 

 

$

—

 

 

$

188,483

 

 

$

188,483

 

 

*Includes cash invested by the Company in money market accounts with certain financial institutions.

The fair value of the acquisition-related liabilities was estimated using the Monte-Carlo simulation model and was classified as a Level 3 financial instrument. The significant assumptions used in the model are the forecasted financial performance of the acquired businesses in future periods.

There were no transfers of financial instruments into or out of Level 3 during the six months ended June 30, 2026 and 2025.

The following table reconciles the changes in the fair value of the liabilities categorized within Level 3 of the fair value hierarchy for the three and six months ended June 30, 2026 and 2025:

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

Balance, beginning of period

 

$

70,176

 

 

$

37,461

 

 

$

188,483

 

 

$

41,864

 

Payments made during the period

 

 

(26,920

)

 

 

(4,005

)

 

 

(140,483

)

 

 

(11,868

)

Change in fair value

 

 

7,649

 

 

 

5,705

 

 

 

2,905

 

 

 

9,165

 

Balance, end of period

 

$

50,905

 

 

$

39,161

 

 

$

50,905

 

 

$

39,161

 

 

In connection with certain business combinations, the Company may owe additional purchase consideration (contingent consideration included in the acquisition-related liabilities) based on the financial performance of the acquired entities after their acquisition. The fair value of the contingent consideration was determined using an unobservable input such as projected revenues, collections of accounts receivables, etc. Changes in any of the assumptions related to the unobservable inputs identified above may change the fair value of the contingent consideration.