Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10. Fair Value Measurements

Financial Instruments not recognized at Fair Value

The Company measures certain liabilities at fair value on a recurring basis, which are discussed below. Our financial instruments not recognized at fair value were as follows:

	As of September 30, 2024				As of December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value		Fair Value Level	Reference
Assets
Due from related party - Advisory Agreements	$	63,159	$	37,231	$	49,877	$	49,877	3	Note 12
Liabilities
Debt Obligations	$	319,411	$	319,411	$	289,844	$	289,844	2	Note 11

As of September 30, 2024 and December 31, 2023, debt obligations' carrying value approximates fair value due to the recent market transaction executed and the variable rate feature of these obligations.

Earnouts associated with the acquisitions of Bonaccord and Hark

Included in total consideration of the acquisition of Bonaccord is an earnout payment not to exceed $20 million. The amount ultimately owed to the sellers is based on achieving specific fundraising targets and any amounts paid to the sellers is required to be paid by October 2027, at which point the earnout expires. Payments are made after each close. As of September 30, 2024, Bonaccord met the fundraising targets and the Company is responsible to pay the sellers the remaining $4.3 million of the earnout, which is expected to be paid by the end of the first quarter of 2025. The Company has paid $15.7 million since inception, of which $2.6 million was paid in the nine months ended September 30, 2024. Total remeasurement expense recognized for the three and nine months ended September 30, 2024 was $0.1 million and $0.2 million, respectively. Total remeasurement expense recognized for the three and nine months ended September 30, 2023 was $0.1 million and $0.5 million, respectively. This is included in contingent consideration expense on the Consolidated Statements of Operations. As

of September 30, 2024, all contingent consideration for the acquisitions of Hark and Bonaccord are considered fully earned. As a result, the liability transfers out of Level 3 fair value measurement as the liability is recorded at cost at the known payment amount. Until considered fully earned, the Company's contingent consideration was considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation. Following September 30, 2024, the Company has paid $2.1 million towards the remaining contingent consideration.

Included in the total consideration of the acquisition of Hark is an earnout not to exceed $5.4 million. Total remeasurement expense recognized for the three and nine months ended September 30, 2024 totaled $0 and $0, respectively. Total remeasurement expense recognized for the three and nine months ended September 30, 2023, respectively, totaled $0 and $0.1 million, which was included in contingent consideration expense on the Consolidated Statements of Operations. The entirety of the Hark contingent consideration of $5.4 million was paid during the year ended December 31, 2023.

The following tables provide details regarding the classification of these liabilities within the fair value hierarchy as of the dates presented:

	As of December 31, 2023
	Level I		Level II		Level III		Total
Liabilities
Contingent consideration obligation	$	-	$	-	$	6,693	$	6,693
Total liabilities	$	-	$	-	$	6,693	$	6,693

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the nine months ended September 30, 2024 and December 31, 2023.

The changes in the fair value of Level III financial instruments are set forth below:

Contingent Consideration Liability	For the Nine Months Ended September 30,
	2024			2023
Balance, beginning of year:	$	6,693		$	17,337
Change in fair value		160			550
Settlements		(2,565	)		(9,686	)
Transfers out of level 3 measurement		(4,288	)		-
Balance, end of period:	$	-		$	8,201

Until transferred out of Level 3 fair value measurement, the fair value of the contingent consideration liability represents the fair value of future payments upon satisfaction of performance targets. The assumptions used in the analysis are inherently subjective; therefore, the ultimate amount of the contingent consideration liability primarily relate to the expected future payments of obligations with a discount rate applied. The contingent consideration liability is included in contingent consideration on the Consolidated Balance Sheets. Changes in the fair value of the liability are included in contingent consideration expense on the Consolidated Statements of Operations.