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Fair Value Instruments

9 Months Ended

Sep. 30, 2022

NOTE 16 — FAIR VALUE INSTRUMENTS

The carrying value of financial instruments reported in the accompanying Condensed Consolidated Balance Sheets for cash, accounts receivable, accounts payable and accrued expenses payable and other liabilities approximate fair value due to the immediate or short-term nature or maturity of these financial instruments.

The following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis:

Debt Instruments

The carrying value of the Company's debt instruments vary from their fair values. The fair values were determined by reference to transacted prices and quotes for these instruments and upon current borrowing rates with similar maturities, which are Level 2 fair value inputs. The estimated fair value, as well as the carrying value, of the Company's debt instruments as of September 30, 2022 and December 31, 2021 are shown below (in millions):


	September 30, 2022		December 31, 2021
Estimated aggregate fair value	$	436.1	$	432.0
Aggregate carrying value (1)		490.4		427.3

(1) Total debt excluding the impact of unamortized debt discount and debt issuance costs.

Contingent Consideration

The contingent consideration liability represents the fair value of the future earn-out that the Company may be required to pay in conjunction with the acquisitions upon the achievement of certain performance milestones. The earn-out for the acquisitions is measured at fair value in each reporting period, based on Level 3 inputs, with any change to the fair value recorded in the Condensed Consolidated Statements of Income (Loss).

The following table sets forth, by level of hierarchy, the Company’s recurring measures at fair value as of September 30, 2022 and December 31, 2021, which was presented in “Other current liabilities” and “Other liabilities” on the Condensed Consolidated Balance Sheets (amounts in millions):


	September 30, 2022
	Level 1		Level 2		Level 3
Liabilities: contingent consideration	$	—	$	—	$	3.2

	December 31, 2021
	Level 1		Level 2		Level 3
Liabilities: contingent consideration	$	—	$	—	$	2.8

The following is a summary of changes to Level 3 instruments as of September 30, 2022 and December 31, 2021 (amounts in millions):


	Contingent Consideration
Balance, January 1, 2021	$	1.8
Acquisition of Ginop		0.9
Change in fair value		0.1
Balance, December 31, 2021	$	2.8
Acquisition of Ginop adjustment		0.3
Changes in fair value		0.4
Payments		(0.3	)
Balance, September 30, 2022	$	3.2

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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