Fair Value Measurement

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurement

16. Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:

•Level 1 – observable inputs such as quoted prices in active markets for identical assets and liabilities;

•Level 2 – inputs other than quoted prices for identical assets in active markets that are observable either directly or indirectly; and

•Level 3 – unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.

The Company’s financial assets and liabilities measured at fair value on a recurring basis are as follows (in millions):

	March 31, 2024
	Level 1		Level 2		Level 3		Total
Assets
Interest rate swaps	$	—	$	77	$	—	$	77
Total assets recorded at fair value	$	—	$	77	$	—	$	77
Liabilities
Interest rate swaps	$	—	$	—	$	—	$	—
Contingent consideration liability		—		—		3		3
Seller Earnouts liability		—		—		114		114
Tax receivable agreement liability (1)		—		—		627		627
Total liabilities recorded at fair value	$	—	$	—	$	744	$	744

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Interest rate swaps	$	—	$	77	$	—	$	77
Total assets recorded at fair value	$	—	$	77	$	—	$	77
Liabilities
Interest rate swaps		—		3		—		3
Contingent consideration liability		—		—		3		3
Seller Earnouts liability		—		—		95		95
Tax receivable agreement liability (1)		—		—		634		634
Total liabilities recorded at fair value	$	—	$	3	$	732	$	735

(1)Excludes the portion of liability related to the exchanges of Class A Units not measured at fair value on a recurring basis.

Derivatives

The valuations of the derivatives intended to mitigate our interest rate risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable

market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential non-performance risk.

Contingent Consideration

The contingent consideration liabilities relate to acquisitions in previous years and are included in Other current liabilities on the Condensed Consolidated Balance Sheets. The fair value of these liabilities is determined using a discounted cash flow analysis. Changes in the fair value of the liabilities are included in Other (income) expense, net in the Condensed Consolidated Statements of Comprehensive Income (Loss). Significant unobservable inputs are used in the assessment of fair value, including assumptions regarding discount rates and probability assessments based on the likelihood of reaching the various targets set out in the acquisition agreements.

The following table summarizes the changes in deferred contingent consideration liabilities (in millions):

	Three Months Ended March 31
	2024		2023
Beginning balance	$	3	$	13
Measurement period adjustments		—		—
Accretion of contingent consideration		—		—
Remeasurement of acquisition-related contingent consideration		—		—
Payments		—		—
Ending Balance	$	3	$	13

Additional Disclosures Regarding Fair Value Measurement

The fair value of the Company’s debt is classified as Level 2 within the fair value hierarchy and corroborated by observable market data is as follows (in millions):

	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities
Current portion of long-term debt, net	$	25	$	25	$	25	$	25
Long-term debt, net		2,762		2,775		2,769		2,780
Total	$	2,787	$	2,800	$	2,794	$	2,805

The carrying value of the Term Loan, Secured Senior Notes include the outstanding principal balance, less any unamortized premium. The carrying value of the Term Loan approximates fair value as it bears interest at variable rates and we believe our credit risk is consistent with when the debt originated. The outstanding balances under the Senior Notes have fixed interest rates and the fair value is classified as Level 2 within the fair value hierarchy and corroborated by observable market data (see Note 8 “Debt”).

The carrying amounts of Cash and cash equivalents, Receivables, net and Accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments.

During each of the three months ended March 31, 2024 and 2023, there were no transfers in or out of the Level 1, Level 2 or Level 3 classifications.