Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017:



(in thousands)	Level 1		Level 2		Level 3		Total
Tax amortization benefit contingency⁽²⁾	—		—		69,599		69,599
Deferred acquisition payment⁽³⁾	—		—		624		624
Stock appreciation rights⁽⁴⁾	—		—		57		57
Phantom shares⁽⁵⁾	—		—		32		32
Total	$	—	$	—	$	70,312	$	70,312

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, 2016:



(in thousands)	Level 1		Level 2		Level 3		Total
Warrant consideration⁽¹⁾	$	—	$	1,080	$	—	$	1,080
Tax amortization benefit contingency⁽²⁾	—		—		150,260		150,260
Deferred acquisition payment⁽³⁾	—		—		2,498		2,498
Stock appreciation rights⁽⁴⁾	—		—		22		22
Phantom shares⁽⁵⁾	—		—		4		4
Total	$	—	$	1,080	$	152,784	$	153,864

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(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. Refer to Note 3 for additional details.

(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, 2017. Refer to Note 3 for additional details.

(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 (as defined in Note 3), 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, 2017.


(4)	The fair value of the stock appreciation rights were measured using a Black Scholes pricing model during the nine months ended September 30, 2017. The valuation technique used did not change during the nine months ended September 30, 2017.


(5)	The fair value of phantom shares are based on the fair value of the Company's common stock. The valuation technique used did not change during the nine months ended September 30, 2017.

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

The following table presents the changes during the period presented in our 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 to the Business Combination.



(in thousands)	Tax amortization benefit contingency			Deferred acquisition payment			Stock appreciation rights		Phantom shares		Total
Balance, December 31, 2016	$	150,260		$	2,498		$	22	$	4	$	152,784
Awards granted	—			—			—		—		—
Settlement of Dow liabilities	(86,931		)	—			—		—		(86,931		)
Accretion	7,297			—			—		—		7,297
Mark to market adjustment	(1,027		)	(1,874		)	35		28		(2,838		)
Balance, September 30, 2017	$	69,599		$	624		$	57	$	32	$	70,312