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

NOTE 8. Fair Value Measurements

The Company determines the fair value of certain financial and nonfinancial assets and liabilities. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value determinations utilize a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability.

 

Classification within the fair value hierarchy contains three levels:

•
Level 1—Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.
•
Level 2—Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the asset or liability being measured.
•
Level 3—Valuation inputs are unobservable and significant to the fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The following table presents assets and liabilities measured at fair value on a recurring basis:

 

 

As of June 30, 2026

 

(in thousands)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

29,889

 

 

$

29,889

 

 

$

-

 

 

$

-

 

Investments in proprietary funds

 

 

722

 

 

 

722

 

 

 

-

 

 

 

-

 

Deferred compensation plan investments

 

 

90,950

 

 

 

90,950

 

 

 

-

 

 

 

-

 

Total Financial Assets

 

$

121,561

 

 

$

121,561

 

 

$

-

 

 

$

-

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration arrangements

 

$

(53,199

)

 

$

-

 

 

$

-

 

 

$

(53,199

)

Total Financial Liabilities

 

$

(53,199

)

 

$

-

 

 

$

-

 

 

$

(53,199

)

 

 

As of December 31, 2025

 

(in thousands)

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

Money market fund

 

$

132,713

 

 

$

132,713

 

 

$

-

 

 

$

-

 

Investments in proprietary funds

 

 

636

 

 

 

636

 

 

 

-

 

 

 

-

 

Deferred compensation plan investments

 

 

98,758

 

 

 

98,758

 

 

 

-

 

 

 

-

 

Total Financial Assets

 

$

232,107

 

 

$

232,107

 

 

$

-

 

 

$

-

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration arrangements

 

$

(87,564

)

 

$

-

 

 

$

-

 

 

$

(87,564

)

Total Financial Liabilities

 

$

(87,564

)

 

$

-

 

 

$

-

 

 

$

(87,564

)

Level 1 assets consist of money market funds and open-end mutual funds. The fair values for these assets are determined utilizing quoted market prices for identical assets.

There were no transfers between any of the Level 1, 2 and 3 categories in the fair value measurement hierarchy from December 31, 2025 to June 30, 2026. The Company recognizes transfers at the end of the reporting period.

The net carrying value of accounts receivable and accounts payable approximates fair value due to the short‑term nature of these assets and liabilities. The fair value of our long-term debt as of June 30, 2026 is considered to be its carrying value as the interest rate on the bank debt is variable and approximates current market rates. As a result, Level 2 inputs are utilized to determine the fair value of our long‑term debt.

Contingent payment arrangements

WestEnd

Contingent consideration arrangements represent the WestEnd earn-out payment liability which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets. Under the terms of the WestEnd purchase agreement, a maximum of $320.0 million ($80.0 million per year) of contingent payments is payable to sellers. Contingent earn-out payments are based on net revenue of the WestEnd business during each of the first four years following the close of the acquisition, subject to certain “catch-up” provisions over a five and one-half year period following the close of the acquisition.

During the six months ended June 30, 2026, the Company paid $39.9 million in cash to sellers for the third earn-out period. The estimated fair value of the contingent consideration payable to the sellers was $53.2 million as of June 30, 2026 and $87.6 million as of December 31, 2025.

For the three and six months ended June 30, 2026, the change in the liability was an increase of $2.0 million and $5.6 million, respectively. For the three and six months ended June 30, 2025, the change in liability was an increase of $1.1 million and $4.5 million, respectively. The impact of decreasing or increasing the valuation of the contingent consideration liability is recorded in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations.

The estimated fair value for contingent consideration payable to sellers is estimated using the real options method. WestEnd net revenue growth is simulated in a risk-neutral framework to calculate expected probability-weighted earn out payments, which are then discounted from the expected payment dates at the relevant cost of debt. Significant assumptions and inputs include the WestEnd net revenue projected annual growth rate, the market price of risk, which adjusts the projected revenue

growth rate to a risk-neutral expected growth rate, revenue volatility and discount rate. The market price of risk and revenue volatility are based on data for comparable companies. As the contingent consideration represents a subordinate, unsecured claim of the Company, the Company assesses a discount rate which incorporates adjustments for credit risk and the subordination of the contingent consideration

Significant inputs to the valuation of contingent consideration payable to sellers as of June 30 2026 and December 31, 2025 are as follows and are approximate values:

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2026

 

 

 

December 31, 2025

 

 

Net revenue 5 year average annual growth rate

 

 

 

12

 

%

 

 

11

 

%

Market price of risk adjustment for revenue (continuous)

 

 

 

4

 

%

 

 

4

 

%

Revenue volatility

 

 

 

20

 

%

 

 

20

 

%

Discount rate

 

 

 

7

 

%

 

 

6

 

%

Years remaining in earn out period

 

 

1.3 years

 

 

 

1.8 years

 

 

Undiscounted estimated remaining earn out payments $ millions

 

 

$50 - $80

 

 

 

$89 - $160

 

 

 

The following table presents the balance of the contingent consideration arrangement liabilities for the six months ended June 30, 2026:

(in thousands)

 

Contingent Consideration Liabilities

 

Balance, December 31, 2025

 

$

87,564

 

WestEnd earn-out payment

 

 

(39,943

)

WestEnd change in fair value measurement

 

 

5,578

 

Balance, June 30, 2026

 

$

53,199

 

New Energy Capital

Under the terms of the purchase agreement for New Energy Capital Partners ("NEC"), which closed during 2021, the Company will pay up to an additional $35.0 million in cash based on net revenue growth over a six-year period on the private, closed-end alternative investment funds managed by the NEC franchise ("NEC Funds"). The maximum amount of contingent payments, less any contingent payments previously paid, is due upon the occurrence of certain specified events within a five year period following the Start Date.

The Company determined that substantially all of the contingent payments payable per the NEC purchase agreement represent compensation for post-closing services. The Company records compensation expense over the estimated service period in an amount equal to the total contingent payments currently forecasted to be paid.

As of June 30, 2026 and December 31, 2025, the Company determined that the contingent payments are no longer probable of occurring and the liability for NEC contingent payments is zero.