Note 11. Fair Value Measurements

Financial Instruments not recognized at Fair Value

Earnouts associated with the acquisitions of Qualitas and Stellus

On April 4, 2025, included in total consideration of the Qualitas acquisition was an earnout payment not to exceed €31.7 million. The amount ultimately owed to the sellers is based on the run-rate net revenue as of December 31, 2027 from newly launched Qualitas funds post acquisition. Any earnout payment will be paid no later than December 31, 2028 in a mix of cash and Class A common stock at the sellers' election, with no more than 65% payable in cash. As of June 30, 2026, no earnout payment has been earned or paid. The determined risk-adjusted discount rates for the contingent consideration of 8.8% and 13.5% were the significant unobservable inputs as of June 30, 2026 and December 31, 2025. Remeasurement of the contingent consideration resulted in $2.2 million of expense and $1.8 million of a gain recognized for the three and six months ended June 30, 2026, respectively. Total remeasurement expense recognized for the three and six months ended June 30, 2025 was $1.1 million. This is included in contingent consideration expense on the Consolidated Statements of Operations.

On June 22, 2026, included in total consideration of the Stellus acquisition was an earnout payment not to exceed $60.0 million. The amount ultimately owed to the sellers is based on the fee-related revenue of Stellus for the years ending December 31, 2027, and December 31, 2029. Any earnout payment will be paid in a mix of cash and partnership units in Ridgepost Capital, LLC at the seller's election, with no more than 50% payable in cash. As of June 30, 2026, no earnout payment has been earned or paid. Total remeasurement expense recognized for both the three and six months ended June 30, 2026, was $0. Any remeasurement expense will be included in contingent consideration expense on the Consolidated Statements of Operations.

Derivative instruments and hedging activities

In September 2025, the Company entered into an interest rate collar agreement to hedge the variability in cash flows associated with its variable-rate borrowings under the Amended and Restated Credit Agreement (as defined below). The collar has a notional amount of $211.3 million, effective as of September 30, 2025, and a termination date of August 1, 2028. The collar references the 3-month United States Dollar ("USD") SOFR Chicago Mercantile Exchange ("CME") term rate ("USD-SOFR-CME"), with a cap strike rate of 4.25% and a floor strike rate of 2.31%.

The Company records the effective portion of changes in the fair value of its cash flow hedges to other comprehensive income, net of tax, and subsequently reclassifies these amounts into earnings in the period during which the hedged transaction is recognized. Any changes in fair value of hedges that are determined to be ineffective are immediately reclassified from accumulated other comprehensive income into earnings. For the three and six months ended June 30, 2026, the Company recorded an unrealized gain on interest rate derivatives, net of tax of $0.7 million and $0.9 million, respectively, which is included in other comprehensive income. For the three and six months ended June 30, 2025, the Company recorded an unrealized gain on interest rate derivatives, net of tax for $0, which is included in other comprehensive income. The Company estimates that an insignificant amount currently recorded in accumulated other comprehensive income will be recognized in earnings over the next 12 months.

When derivatives are used, the Company is exposed to credit loss in the event of non-performance by the counterparties; non-performance risk is incorporated into the valuation of the hedges, but non-performance by any of our derivative counterparties is not anticipated. ASC 815 requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks, which are significant observable inputs or Level 2 inputs.

The amounts included in accumulated other comprehensive income will be reclassified to interest expense should the hedges no longer be considered effective. No amount of ineffectiveness was included in net income for the three and six months ended June 30, 2026 and 2025.The Company will continue to assess the effectiveness of the hedges on an ongoing basis.

Until transferred out of Level 3 fair value measurement, the fair value of the contingent consideration liability represents the fair value of future payments upon satisfaction of performance targets. The assumptions used in the analysis are inherently subjective; therefore, the ultimate amount of the contingent consideration liability primarily relates to the expected future payments of obligations with a discount rate applied. The contingent consideration liability is included in contingent consideration on the Consolidated Balance Sheets.