Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three levels of inputs that may be used to measure fair value, which are as follows:


•	Level 1 – Observable inputs, such as quoted market prices for identical assets and liabilities in active public markets.


•	Level 2 – Observable inputs other than Level 1 prices based on quoted prices in markets with insufficient volume or infrequent transactions, or valuations in which all significant inputs are observable for substantially the full term of the asset or liability.


•	Level 3 – Unobservable inputs to the valuation techniques that are significant to the fair value of the asset or liability.

Assets and liabilities are measured at fair value based on one or more of the following three valuation techniques:


•	Market approach – Fair value is determined based on prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities.


•	Income approach – Fair value is determined by converting relevant future amounts to a single present amount based on market expectations (including present value techniques and option pricing models).


•	Cost approach – Fair value represents the amount that currently would be required to replace the service capacity of the relevant asset (often referred to as replacement cost).

The fair value hierarchy of Actua’s financial assets and liabilities measured at fair value on a recurring basis were as follows:



(in thousands)				Valuation
				Technique
	Asset (Liability)			(Approach)	Level 1		Level 2		Level 3
March 31, 2017
Cash equivalents (money market accounts)	$	69,041		Market	$	69,041	$	—	$	—
Acquisition contingent consideration obligations	(8,610		)	Income	—		—		(8,610		)
	$	60,431			$	69,041	$	—	$	(8,610	)

				Valuation
				Technique
	Asset (Liability)			(Approach)	Level 1		Level 2		Level 3
December 31, 2016
Cash equivalents (money market accounts)	$	89,220		Market	$	89,220	$	—	$	—
Acquisition contingent consideration obligations	(8,752		)	Income	—		—		(8,752		)
	$	80,468			$	89,220	$	—	$	(8,752	)

The carrying value of certain of Actua’s other financial instruments, including accounts receivable and accounts payable, approximates fair value due to the short-term nature of those instruments.

As of March 31, 2017 and December 31, 2016, Actua accounted for a contingent earn-out payment related to FolioDynamix’s acquisition of SAS (the "SAS Earnout"), which was a component of the purchase price for SAS. A fair value of the SAS Earnout was determined on the date of acquisition using Monte Carlo simulation models that yielded a value of $7.9 million. The ultimate obligation could range in value up to $20.4 million. The fair value of the SAS Earnout as of March 31, 2017 is $8.6 million which has been determined through the update of models, Actua's calculations and/or qualitative analysis. Changes in the fair value of the SAS Earnout were reflected in the "Impairment related and other" line item on Actua's Consolidated Statements of Operations and Comprehensive Income (Loss).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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