Contingent Consideration

The Partnership has contingent consideration obligations related to its business acquisitions and strategic investments. The changes in the contingent consideration liabilities are as follows:



	Rollforward For The Years Ended December 31, 2015 and 2014
	Amounts payable to the sellers who are Carlyle professionals
	Performance-based contingent cash consideration			Performance-based contingent equity consideration			Employment-based contingent cash consideration			Contingent cash and other consideration payable to non- Carlyle personnel				Total
Balance at December 31, 2013	$	145.1		$	15.7		$	148.7		$	40.8			$	350.3
Contingent consideration from new acquisition / investments	—			—			—			—				—
Change in carrying value	(27.6		)	(2.9		)	10.1			169.2			(a)	148.8
Payments	(90.7		)	—			(1.2		)	(7.2		)		(99.1		)
Issuances of equity	—			(12.8		)	(0.8		)	(1.8		)		(15.4		)
Balance at December 31, 2014	26.8			—			156.8			201.0				384.6
Change in carrying value	2.1			—			(70.9		)	22.9			(a)	(45.9		)
Payments	(20.2		)	—			(3.3		)	(2.4		)		(25.9		)
Issuances of equity	—			—			(2.2		)	—				(2.2		)
Balance at December 31, 2015	$	8.7		$	—		$	80.4		$	221.5			$	310.6


(a)	Refer to Note 6 for information on the contingent consideration payable to BNRI from the strategic investment in NGP.

The fair value of the performance-based contingent cash and equity consideration payable to the sellers who are Carlyle professionals has been recorded in due to affiliates in the accompanying consolidated balance sheets. These payments are not contingent upon the Carlyle professional being employed by Carlyle at the time that the performance conditions are met. Changes in the fair value of these amounts are recorded in other non-operating expense (income) in the consolidated statements of operations. The portion of the contingent consideration payment attributable to the initial amount recorded as part of the consideration transferred is classified as cash flows from financing activities. The portion of the contingent consideration payment that is attributable to the subsequent changes in the fair value of the contingent consideration is classified as cash flows from operating activities in the consolidated statements of cash flows.

The amount of employment-based contingent cash consideration payable to the sellers who are Carlyle professionals has been recorded as accrued compensation and benefits in the accompanying consolidated balance sheets. Changes in the value of these amounts are recorded as compensation expense in the consolidated statements of operations. In June 2015, the Partnership amended the agreements relating to the original acquisition of Vermillion, now called Carlyle Commodity Management. As a result of the amendment, the Partnership’s economic interest in Carlyle Commodity Management increased from 55% to approximately 83% effective July 1, 2015; no consideration was paid by the Partnership for the increase in economic interest. Also, as a result of the amendment, the estimated value of the employment-based contingent consideration liability decreased by $46.3 million, which was recognized by the Partnership as a reduction in base compensation expense for the year ended December 31, 2015.

The fair value of contingent consideration payable to non-Carlyle personnel is included in accounts payable, accrued expenses and other liabilities, or due to affiliates for amounts payable to NGP, in the accompanying consolidated balance sheets. Changes in the fair value of this contingent consideration are recorded in other non-operating expense (income), or investment income in the case of amounts payable to NGP, in the consolidated statements of operations. Included in the change in carrying value for the year ended December 31, 2015 is $23.2 million related to the accrual of additional contingent consideration payable to BNRI (See Note 6). This amount was capitalized into the carrying value of the Partnership's equity method investment in NGP.

The fair values of the performance-based contingent cash consideration for business acquisitions were based on probability-weighted discounted cash flow models. These fair value measurements are based on significant inputs not observable in the market and thus represent Level III measurements as defined in the accounting guidance for fair value measurement. Refer to Note 4 for additional disclosures related to the fair value of these instruments as of December 31, 2015 and 2014.

The following table represents the maximum amounts that could be paid from contingent cash obligations associated with the business acquisitions and the strategic investment in NGP Management:



	As of December 31, 2015
	Business Acquisitions		NGP Investment		Total		Liability Recognized on Financial Statements ⁽¹⁾
			(Dollars in millions)
Performance-based contingent cash consideration	$	208.2	$	183.0	$	391.2	$	230.2
Employment-based contingent cash consideration	148.4		45.0		193.4		80.4
Total maximum cash obligations	$	356.6	$	228.0	$	584.6	$	310.6

(1)

On the consolidated balance sheet, the liability for performance-based contingent cash consideration is included in due to affiliates (for amounts owed to Carlyle professionals and NGP) and accounts payable, accrued expenses, and other liabilities (for amounts owed to other sellers), and the liability for employment-based contingent cash consideration is included in accrued compensation and benefits.

Some of the employment-based contingent cash consideration agreements do not contain provisions limiting the amount that could be paid by the Partnership. For purposes of the table above, the Partnership has used its current estimate of the amount to be paid upon the determination dates for such payments. In the consolidated financial statements, the Partnership records the performance-based contingent cash consideration from business acquisitions at fair value at each reporting period. For the employment-based contingent cash consideration, the Partnership accrues the compensation liability over the implied service period.