Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 5. Fair Value Measurements

The Company determines the fair value of certain financial and nonfinancial assets and liabilities. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value determinations utilize a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability.

Classification within the fair value hierarchy contains three levels:

•Level 1—Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

•Level 2—Valuation inputs are quoted prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets and other observable inputs directly or indirectly related to the asset or liability being measured.

•Level 3—Valuation inputs are unobservable and significant to the fair value measurement. These inputs reflect management's own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The following table presents assets and liabilities measured at fair value on a recurring basis:

	As of September 30, 2024
(in thousands)	Total			Level 1		Level 2		Level 3
Financial Assets
Money market fund	$	169,541		$	169,541	$	—	$	—
Investments in proprietary funds		596			596		—		—
Deferred compensation plan investments		34,147			34,147		—		—
Total Financial Assets	$	204,284		$	204,284	$	—	$	—
Financial Liabilities
Contingent consideration arrangements		(139,600	)		—		—		(139,600	)
Total Financial Liabilities	$	(139,600	)	$	—	$	—	$	(139,600	)

	As of December 31, 2023
(in thousands)	Total			Level 1		Level 2		Level 3
Financial Assets
Money market fund	$	109,183		$	109,183	$	—	$	—
Investments in proprietary funds		534			534		—		—
Deferred compensation plan investments		31,274			31,274		—		—
Total Financial Assets	$	140,991		$	140,991	$	—	$	—
Financial Liabilities
Contingent consideration arrangements		(217,200	)		—		—	$	(217,200	)
Total Financial Liabilities	$	(217,200	)	$	—	$	—	$	(217,200	)

Level 1 assets consist of money market funds and open-end mutual funds. The fair values for these assets are determined utilizing quoted market prices for identical assets.

Contingent consideration arrangements represent the WestEnd earn-out payment liability, which is included in consideration payable for acquisition of business in the unaudited Condensed Consolidated Balance Sheets.

Significant unobservable inputs for the option pricing model used to determine the estimated fair value of the WestEnd Acquisition earn-out payment liability include the WestEnd net revenue projected growth rate, revenue volatility, market price of risk and discount rate. An increase in the projected growth rate for net revenue results in a higher fair value for the earn-out payment liability while an increase in the discount rate results in a lower fair value for the earn-out payment liability. An increase in the market price of risk and revenue volatility results in a lower fair value. Refer to Note 4, Acquisitions, for further details related to the valuation of contingent consideration payable related to the WestEnd Acquisition.

Changes in the fair value of contingent consideration arrangement liabilities, realized or unrealized, are recorded in earnings and are included in change in value of consideration payable for acquisition of business in the unaudited Condensed Consolidated Statements of Operations.

The following table presents the balance of the change in contingent consideration arrangement liabilities for the nine months ended September 30, 2024:

(in thousands)	Contingent Consideration Liabilities
Balance, December 31, 2023	$	217,200
WestEnd earn-out payment		(80,000	)
WestEnd change in fair value measurement		2,400
Balance, September 30, 2024	$	139,600

There were no transfers between any of the Level 1, 2 and 3 categories in the fair value measurement hierarchy from December 31, 2023 to September 30, 2024. The Company recognizes transfers at the end of the reporting period.

The net carrying value of accounts receivable and accounts payable approximates fair value due to the short‑term nature of these assets and liabilities. The fair value of our long-term debt as of September 30, 2024 is considered to be its carrying value as the interest rate on the bank debt is variable and approximates current market rates. As a result, Level 2 inputs are utilized to determine the fair value of our long‑term debt.