Quarterly report [Sections 13 or 15(d)]

Fair Value Measurements

v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
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 measurement 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 March 31,
2026 and December 31, 2025, 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, and any current portion of such debt, was
$3,256.9 million and $3,308.4 million as of March 31, 2026 and December 31, 2025, respectively. The fair value of the
Term Loan and Senior Secured Notes would be classified as Level 2 in the fair value hierarchy. See Note 7, Debt, for the
carrying values of the Company’s debt.
Interest Rate Cap
The Company used 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 was determined using the market standard methodology of discounting the
future expected cash receipts that would occur if variable interest rates rose above the strike rate of the cap. The variable
interest rates used in the calculation of projected receipts on the cap were 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 were considered Level 2 inputs. See Note 11, 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 March 31, 2026, the models used risk-free rates, expected volatility, and a credit
spread that ranged from 2.0% to 3.7%, 6.6% to 28.1%, and 0.6% to 3.3%, respectively. As of December 31, 2025, the
models used risk-free rates, expected volatility, and a credit spread that ranged from 1.9% to 3.7%, 6.2% to 21.5%, and
0.8% to 2.7%, 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 4.1% to 6.9%
and 4.2% to 6.4% as of March 31, 2026 and December 31, 2025, 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 (Loss). 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. 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:
March 31, 2026
December 31, 2025
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets
Contingently returnable
consideration
$—
$—
$3,197
$—
$—
$6,550
Liabilities
Contingent consideration
—
—
177,838
—
—
148,388
Total assets and liabilities
measured at fair value
$—
$—
$181,035
$—
$—
$154,938
Contingently returnable consideration of $3.2 million and $3.3 million was recorded in Other current assets on the
Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively. Contingently returnable
consideration of $3.3 million was recorded in Other non-current assets on the Consolidated Balance Sheets as of
December 31, 2025. Contingent consideration of $86.6 million and $55.9 million was recorded in Accounts payable and
accrued liabilities on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.
Contingent consideration of $91.2 million and $92.5 million was recorded in Other non-current liabilities on the
Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, 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 March 31,
2026
2025
Assets
Balance at beginning of period
$6,550
$5,483
Total gains included in earnings
178
1,354
Foreign currency translation adjustments included in OCI
(119)
200
Settlements
(3,412)
(1,927)
Balance at end of period
$3,197
$5,110
Liabilities
Balance at beginning of period
$148,388
$129,059
Newly established liabilities due to acquisitions
—
21,130
Total (gains) losses included in earnings
29,788
(10,356)
Foreign currency translation adjustments included in OCI
(30)
—
Settlements
(308)
(43,500)
Balance at end of period
$177,838
$96,333
For the three months ended March 31, 2026, $0.3 million and $3.1 million of contingently returnable consideration
settlements are presented in the operating and financing sections, respectively, of the Consolidated Statements of Cash
Flows. For the three months ended March 31, 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 three months ended March 31,
2026, contingent consideration settlements of $0.3 million and a de minimis amount are presented in the operating and
financing sections, respectively, of the Consolidated Statements of Cash Flows. For the three months ended March 31,
2025, $18.3 million and $25.2 million of contingent consideration settlements are presented in the operating and financing
sections, respectively, of the Consolidated Statements of Cash Flows.