Alight, Inc. / DelawareALIT

Alight, Inc. / Delaware Fair Value Disclosure

10-KFiled Feb 24, 20263 min read
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):
December 31, 2025
Level 1Level 2Level 3Total
Assets
Interest rate swaps$— $5 $— $5 
Additional seller note— — — — 
Total assets recorded at fair value$— $5 $— $5 
Liabilities
Interest rate swaps$— $1 $— $1 
Seller earnouts liability— — — — 
Tax receivable agreement liability (1)
— — 435 435 
Total liabilities recorded at fair value$— $1 $435 $436 
December 31, 2024
Level 1Level 2Level 3Total
Assets
Interest rate swaps$— $31 $— $31 
Additional seller note— — 50 50 
Total assets recorded at fair value$— $31 $50 $81 
Liabilities
Interest rate swaps$— $— $— $— 
Contingent consideration liability— — 6 6 
Seller earnouts liability— — 51 51 
Tax receivable agreement liability (1)
— — 620 620 
Total liabilities recorded at fair value$— $— $677 $677 
_________________________________________________________
(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.
Additional Disclosures Regarding Fair Value Measurements
The fair value of the Company’s debt is classified as Level 2 and the Seller note is classified as Level 3 within the fair value hierarchy and corroborated by observable market data is as follows (in millions):
December 31, 2025December 31, 2024
Carrying ValueFair ValueCarrying ValueFair Value
Assets
Seller note$42 $46 $37 $37 
Total assets$42 $46 $37 $37 
Liabilities
Current portion of long-term debt, net$20 $19 $25 $25 
Long-term debt, net1,985 1,903 2,000 2,008 
Total$2,005 $1,922 $2,025 $2,033 
The carrying value of the Term Loan includes the outstanding principal balance, less any unamortized premium.
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 years ended December 31, 2025 and 2024, there were no transfers in or out of the Level 1, Level 2 or Level 3 classifications.

Historical Timeline

Fiscal YearFiled
2025Feb 24, 2026Showing above
2024Feb 27, 2025
2023Feb 29, 2024
2022Mar 1, 2023
2021Mar 10, 2022
2020Feb 26, 2021

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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