Fair Value Measurements

The following presents our assets and liabilities measured at fair value on a recurring basis (in thousands):



	Fair Value Measurements on a Recurring Basis as of December 31, 2017
Fair value measurements in:	Level 1		Level 2		Level 3		Total
Assets:
Money market account	$	65,620	$	—	$	—	$	65,620
Total	$	65,620	$	—	$	—	$	65,620
Liabilities:
Subsidiary unit awards	$	—	$	—	$	3,160	$	3,160
Contingent consideration liability from acquisition	—		—		—		—
Total	$	—	$	—	$	3,160	$	3,160



	Fair Value Measurements on a Recurring Basis as of December 31, 2016
Fair value measurements in:	Level 1		Level 2		Level 3		Total
Assets:
Money market account	$	135,204	$	—	$	—	$	135,204
Total	$	135,204	$	—	$	—	$	135,204
Liabilities:
Subsidiary unit awards	$	—	$	—	$	2,768	$	2,768
Contingent consideration liability from acquisition	—		—		—		—
Total	$	—	$	—	$	2,768	$	2,768

The following table summarizes the change in fair value of the Level 3 liabilities for subsidiary unit awards and the contingent consideration liability from acquisition (in thousands):



	Fair Value Measurements Using Significant Unobservable Inputs
	Year Ended December 31, 2017				Year Ended December 31, 2016
	Subsidiary Unit Awards		Contingent Consideration Liability from Acquisition		Subsidiary Unit Awards		Contingent Consideration Liability from Acquisition
Beginning of period balance	$	2,768	$	—	$	532	$	230
Total losses / (gains) included in earnings	392		—		2,236		(230		)
Ending of period balance	$	3,160	$	—	$	2,768	$	—

The money market account is included in our cash and cash equivalents in our consolidated balance sheets. Our money market assets are valued using quoted prices in active markets.

The liability for the subsidiary unit awards relates to agreements established with employees of our subsidiaries for cash awards contingent upon the subsidiary companies meeting certain financial milestones such as revenue, working capital, EBITDA and EBITDA margin. We account for these subsidiary awards using fair value and establish liabilities for the future payment for the repurchase of subsidiary units under the terms of the agreements based on estimating revenue, working capital, EBITDA and EBITDA margin of the subsidiary units over the periods of the awards through the anticipated repurchase dates. We estimated the fair value of each liability by using a Monte Carlo simulation model for determining each of the projected measures by using an expected distribution of potential outcomes. The fair value of each liability is calculated with thousands of projected outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date until the respective payment dates, we will remeasure these liabilities, using the same valuation approach based on the applicable subsidiary's revenue, an unobservable input, and we will record any changes in the employee's compensation expense. Some of the awards are subject to the employees' continued employment and therefore recorded on a straight-line basis over the remaining service period. The liability balances are included in either accounts payable, accrued expenses and other current liabilities or other liabilities in our consolidated balance sheets (See Note 12).

The amount of contingent consideration liability to be paid, up to a maximum of $2.0 million, from our acquisition of SecurityTrax in the first quarter of 2015, was determined based on revenue and adjusted EBITDA for the year ended December 31, 2017. From the first quarter of 2015 to the third quarter of 2017, we estimated the fair value of the contingent consideration liability by using a Monte Carlo simulation model for determining projected revenue by using an expected distribution of potential outcomes. The fair value of contingent consideration liability was calculated with thousands of projected revenue outcomes, the results of which are averaged and then discounted to estimate the present value. At each reporting date, we remeasured the contingent consideration liability, using the same valuation approach based on our subsidiary’s revenue, an unobservable input. Based on the results for the year ended December 31, 2017, we do not expect to payout any of the contingent consideration during the first quarter of 2018, and therefore, we did not record a liability related to this contingent consideration in our consolidated balance sheet as of December 31, 2017 and 2016, as the fair value of the contingent consideration liability was zero.

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2017, 2016 and 2015. We also monitor the value of the investments for other-than-temporary impairment on a quarterly basis. No other-than-temporary impairments occurred during the years ended December 31, 2017, 2016 and 2015.