Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company’s derivatives (interest rate swap and interest rate cap agreements, TRA and noncontrolling interests subject to put provisions) are accounted for at fair value and are classified and disclosed in one of the following three categories:

Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges.

Level 2: Financial instruments determined using prices for recently traded financial instruments with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3: Financial instruments not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

The asset or liability fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. There were no changes in the methodologies used at December 31, 2019.

Derivative agreements— See “Note 14—Debt” for a discussion of the Company’s methodology for estimating fair value of interest rate swap and interest rate cap agreements.

Income Tax Receivable Agreement—The fair value of the Company’s TRA relies upon both Level 2 data and Level 3 inputs. The liability is remeasured at fair value each reporting period with the change in fair value recognized as Change in fair value of income tax receivable agreement in the Company’s Consolidated Statements of Operations. The fair value is calculated using a Monte Carlo simulation-based approach that relies on significant assumptions about the Company’s stock price, stock volatility and risk-free rate as well as the timing and amounts of options exercised. Changes in assumptions based on future events, including the price of the Company’s common stock, will impact the fair value for the TRA.  See “Note 19—Related Party Transactions” for further discussion of the TRA.   

Noncontrolling interests subject to put provisions— See “Note 12—Noncontrolling Interests Subject to Put Provisions”  for a discussion of the Company’s methodology for estimating fair value of noncontrolling interests subject to put provisions.

Transfers among levels are calculated on values as of the transfer date. There were no transfers into or out of Level 3 during the years ended December 31, 2019 and 2018.

	December 31, 2019
	Total		Level 1		Level 2		Level 3
Assets
Interest rate derivative agreements (included in Prepaid expenses and other current assets)	$	143	$	—	$	143	$	—
Total Assets	$	143	$	—	$	143	$	—
Liabilities
Tax Receivable Agreement Liability (included in Income tax receivable agreement payable)	$	3,000	$	—	$	—	$	3,000
Interest rate swap agreement (included in Accrued expense and other current liabilities)	783		—		783		—
Interest rate swap agreement (included in Other long-term liabilities)	725		—		725		—
Total Liabilities	$	4,508	$	—	$	1,508	$	3,000
Temporary Equity
Noncontrolling interests subject to put provisions	$	126,483	$	—	$	—	$	126,483

	December 31, 2018
	Total		Level 1		Level 2		Level 3
Assets
Interest rate derivative agreements (included in Prepaid expenses and other current assets)	$	836	$	—	$	836	$	—
Interest rate derivative agreements (included in Other long-term assets)	395		—		395		—
Total Assets	$	1,231	$	—	$	1,231	$	—
Liabilities
Tax Receivable Agreement Liability (included in Income tax receivable agreement payable)	$	3,700	$	—	$	—	$	3,700
Total Liabilities	$	3,700	$	—	$	—	$	3,700
Temporary Equity
Noncontrolling interests subject to put provisions	$	129,099	$	—	$	—	$	129,099

The following table provides the fair value rollforward for the TRA liability, which is classified as a Level 3 financial instrument. 

Balance at December 31, 2017	$	7,500
Options exercised and dividend equivalent payment vesting	(1,127		)
Total realized/unrealized gains:
Included in earnings and reported as Change in fair value of income tax receivable agreement	(2,673		)
Balance at December 31, 2018	$	3,700
Options exercised and dividend equivalent payment vesting	(479		)
Total realized/unrealized gains:
Included in earnings and reported as Change in fair value of income tax receivable agreement	(221		)
Balance at December 31, 2019	$	3,000

There are no unrealized gains or losses reported in Other Comprehensive Income related to Level 3 financial instruments.

The carrying amounts reported in the accompanying Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short‑term nature. The fair value of the Company’s debt is estimated using Level 2 inputs based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The Company estimated the fair value of the 2017 Term B Loan Facility, as defined in “Note 14—Debt,” to be $407,550 as of December 31, 2019 compared to a carrying value of $429,000. As of December 31, 2018, the Company estimated the fair value of the first lien term loans to be $424,732 compared to the carrying value of $433,400.