Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Tabular disclosure of financial instruments measured at fair value on a recurring basis

The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of September 30, 2016:



	Fair Value Measurements, Using
(in thousands)	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total carrying value as of September 30, 2016
Warrant consideration⁽¹⁾	—		4,680		—		4,680
Tax amortization benefit contingency⁽²⁾	—		—		163,498		163,498
Deferred acquisition payment⁽³⁾	—		—		28,325		28,325
Total	$	—	$	4,680	$	191,823	$	196,503

The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2015:



	Fair Value Measurements, Using
(in thousands)	Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total carrying value as of December 31, 2015
Warrant consideration⁽¹⁾	—		6,000		—		6,000
Tax amortization benefit contingency⁽²⁾	—		—		149,620		149,620
Deferred acquisition payment⁽³⁾	—		—		22,700		22,700
Total	$	—	$	6,000	$	172,320	$	178,320


(1)	This liability relates to warrants to purchase the Company's common stock and future obligations to deliver additional such warrants in relation to the Business Combination. The inputs used in the fair value measurement were directly observable quoted prices for identical assets in an inactive market.


(2)	The fair value of the tax amortization benefit contingency is measured using an income approach based on the Company's best estimate of the undiscounted cash payments to be made, tax effected at 37% and discounted to present value utilizing an appropriate market discount rate. The valuation technique used did not change during the nine months ended September 30, 2016.


(3)	The fair value of the deferred acquisition payment is measured using a Black-Scholes option pricing model and based on the Company's best estimate of the Company's average Business EBITDA, as defined in the Purchase Agreement, over the two year period from January 1, 2016 to December 31, 2017. The valuation technique used did not change during the nine months ended September 30, 2016.

Changes in financial instruments measured at level 3 fair value on a recurring basis

The following tables present the changes during the periods presented in the Company's Level 3 financial instruments that are measured at fair value on a recurring basis. These instruments relate to contingent consideration payable to Dow in connection with the Business Combination.



(in thousands)	Tax amortization benefit contingency			Deferred acquisition payment			Total
Balance, December 31, 2015	$	149,620		$	22,700		$	172,320
Measurement period adjustment	2,223			(2,000		)	223
Accretion⁽¹⁾	12,206			10,725			22,931
Mark to market adjustment⁽²⁾	(551		)	(3,100		)	(3,651		)
Balance September 30, 2016	$	163,498		$	28,325		$	191,823

(1) Accretion expense for the three months ended September 30, 2016 was $4.0 million for the tax benefit contingency and $3.6 million for the deferred acquisition payment.

(2) The mark to market adjustment for the three months ended September 30, 2016 was $0.6 million for the tax benefit contingency and $0.0 million for the deferred acquisition payment.