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Fair Value Measurements

12 Months Ended

Dec. 31, 2023

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Private Warrants—As of December 31, 2023 and 2022, the Company’s Private Warrants are recognized as liabilities and measured at fair value on a recurring basis.

The Private Warrants are valued using Level 1 and Level 2 inputs within the Black-Scholes option pricing model. The inputs and assumptions utilized under the Black-Scholes option pricing model require judgments and estimates. Changes in these inputs and assumptions could affect the measurement of the estimated fair value of the Private Warrants. Accordingly, the Private Warrants are classified within Level 2 of the fair value hierarchy.

The valuation of the Private Warrants as of December 31, 2023 and December 31, 2022 was determined using the Black-Scholes option pricing model using the following assumptions:


	December 31,			December 31,
	2023			2022
Expected term (in years)	2.6			3.6
Expected volatility		34	%		38	%
Expected dividend yield		0	%		0	%
Risk-free interest rate		4.10	%		4.15	%

The estimated fair value of each Private Warrant using the Company's stock price on the valuation date and the above assumptions was $2.89 and $2.05 as of December 31, 2023 and 2022, respectively.

Contingent Consideration Liability—The contingent consideration liability related to the acquisition of Safekeep (see Note 4), recognized within other liabilities on the consolidated balance sheet, is adjusted each reporting period for changes in fair value, which can result from changes in anticipated payments and changes in the assumed discount rate. These inputs are unobservable in the market and therefore, the contingent consideration liability was classified within Level 3 of the fair value hierarchy as of December 31, 2023 and 2022.

The estimated fair value of the contingent consideration at the date of acquisition was determined using probability-weighted discounted cash flows and a Monte Carlo simulation model. The discount rate used to estimate fair value is based on the Company's estimated cost of debt and was 10% as of December 31, 2022.

As of December 31, 2022, the contingent consideration liability had a fair value of $0.1 million. As of December 31, 2023, there were no significant changes to the inputs used within the Monte Carlo simulation model, and the estimated fair value of the contingent consideration liability was $0.1 million. The contingent consideration liability is classified within other liabilities in the accompanying consolidated balance sheets.

During the year ended December 31, 2023, the Company did not recognize any change in the estimated fair value of the contingent consideration. During the year ended December 31, 2022, the Company recognized a $0.1 million gain from the change in the estimated fair value of the contingent consideration liability, within general and administrative expenses on the consolidated statement of operations and comprehensive (loss) income.

Interest Rate Cap—In August 2022, the Company entered into two interest rate cap agreements to reduce its exposure to increases in interest rates applicable to its floating rate long-term debt (See Note 16). The fair value of the interest rate cap agreements was estimated using inputs that were observable or that could be corroborated by observable market data and therefore, was classified within Level 2 of the fair value hierarchy as of December 31, 2023 and 2022.

The Company did not designate its interest rate cap agreements as hedging instruments and records the changes in fair value within other income-net on the consolidated statement of operations and comprehensive (loss) income. The interest rate cap agreements' fair value was $6.2 million and $12.0 million as of December 31, 2023 and 2022, respectively, classified within other assets in the accompanying consolidated balance sheet.

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis at December 31, 2023 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap	$	6,208	$	—	$	6,208	$	—
Total Assets	$	6,208	$	—	$	6,208	$	—
Liabilities
Contingent consideration related to business acquisition	$	100	$	—	$	—	$	100
Private warrants		51,501		—		51,501		—
Total Liabilities	$	51,601	$	—	$	51,501	$	100

The following table presents the fair value of the assets and liabilities measured at fair value on a recurring basis at December 31, 2022 (in thousands):


	Fair Value		Level 1		Level 2		Level 3
Assets
Interest rate cap	$	11,951	$	—	$	11,951	$	—
Total Assets	$	11,951	$	—	$	11,951	$	—
Liabilities
Contingent consideration related to business acquisition	$	100	$	—	$	—	$	100
Private warrants		36,405		—		36,405		—
Total Liabilities	$	36,505	$	—	$	36,405	$	100

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis—The Company has assets that under certain conditions are subject to measurement at fair value on a nonrecurring basis. These assets include those associated with acquired businesses, including goodwill and other intangible assets. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or more is determined to be impaired.

During the year ended December 31, 2023 the Company recognized impairment charges of goodwill and definite-lived intangible assets (See Note 12). The Company did not recognize impairment charges related to these assets during the years ended December 31, 2022 and 2021.

Fair Value of Other Financial Instruments—The following table presents the carrying amounts, net of debt discount, and estimated fair values of the Company’s financial instruments that are not recorded at fair value on the consolidated balance sheets (in thousands):


	December 31, 2023				December 31, 2022
	Carrying		Estimated		Carrying		Estimated
Description	Amount		Fair Value		Amount		Fair Value
Term B Loan, including current maturities	$	782,564	$	784,000	$	790,331	$	766,260

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar instruments and fluctuates with changes in applicable interest rates among other factors. The fair value of long-term debt is classified as a Level 2 measurement in the fair value hierarchy and is established based on observable inputs in less active markets.

- 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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