APi Group CorpAPG
APi Group Corp Fair Value Disclosure
FAIR VALUE OF FINANCIAL INSTRUMENTS
GAAP defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of
future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. As the basis for evaluating such inputs, a three-tier value hierarchy prioritizes the inputs used in measuring fair value as follows:
| Level 1: | Observable inputs such as quoted prices for identical assets or liabilities in active markets. | ||||
| Level 2: | Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | ||||
| Level 3: | Unobservable inputs that reflect the Company’s own assumptions. | ||||
Recurring fair value measurements
The Company’s financial assets and liabilities (adjusted to fair value at least quarterly) are derivative instruments and contingent consideration obligations. In the consolidated balance sheets, derivative instruments are primarily included in other noncurrent assets and other noncurrent liabilities and contingent consideration obligations are primarily included in contingent consideration and compensation liabilities.
The following tables summarize the fair values and levels within the fair value hierarchy in which the measurements fall for assets and liabilities measured on a recurring basis as of December 31, 2025 and 2024:
| Fair Value Measurements at December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 1 | $ | — | $ | 1 | |||||||||||||||
| Cross currency contracts | — | 3 | — | 3 | |||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | |||||||||||||||||||
| Fair value hedges – cross currency contracts | — | 2 | — | 2 | |||||||||||||||||||
| Net investment hedges – cross currency contracts | — | 10 | — | 10 | |||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | — | 1 | — | 1 | |||||||||||||||||||
| Total | $ | — | $ | 17 | $ | — | $ | 17 | |||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | — | (5) | — | (5) | |||||||||||||||||||
| Contingent consideration obligations | — | — | (16) | (16) | |||||||||||||||||||
| Total | $ | — | $ | (5) | $ | (16) | $ | (21) | |||||||||||||||
| Fair Value Measurements at December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||
| Cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | — | $ | 25 | $ | — | $ | 25 | |||||||||||||||
| Cross currency contracts | — | 14 | — | 14 | |||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | |||||||||||||||||||
| Fair value hedges – cross currency contracts | — | 54 | — | 54 | |||||||||||||||||||
| Net investment hedges – cross currency contracts | — | 28 | — | 28 | |||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | |||||||||||||||||||
| Total | $ | — | $ | 121 | $ | — | $ | 121 | |||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | |||||||||||||||||||
| Contingent consideration obligations | — | — | (13) | (13) | |||||||||||||||||||
| Total | $ | — | $ | — | $ | (13) | $ | (13) | |||||||||||||||
The Company determines the fair value of its derivative instruments designated as hedging instruments using standard pricing models and market-based assumptions for all inputs such as yield curves and quoted spot and forward exchange rates. Accordingly, the Company’s derivative instruments are classified as Level 2.
Contingent consideration obligations
The value of the contingent consideration obligations is determined using a probability-weighted discounted cash flow method. This fair value measurement is based on unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows, and a discount rate. Depending on the contractual terms of the purchase agreement, the probabilities of achieving future cash flows or earnings generally represent the only significant unobservable inputs. The contingent consideration obligations are measured at fair value each reporting period and changes in estimates of fair value are recognized in earnings.
The table below presents a reconciliation of the fair value of the Company’s contingent consideration obligations that use unobservable inputs, as well as other information about the contingent consideration obligations:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance at the beginning of the year | $ | 13 | $ | 6 | $ | 4 | |||||||||||
| Issuances | 9 | 13 | 3 | ||||||||||||||
| Settlements | (4) | (6) | (1) | ||||||||||||||
| Adjustments to fair value | (2) | — | — | ||||||||||||||
| Balance at the end of the year | $ | 16 | $ | 13 | $ | 6 | |||||||||||
| Number of open contingent consideration arrangements at the end of the year | 10 | 9 | 2 | ||||||||||||||
| Maximum potential payout at the end of the year | $ | 18 | $ | 13 | $ | 6 | |||||||||||
At December 31, 2025, the remaining open contingent consideration arrangements are set to expire at various dates through 2028. Level 3 unobservable inputs were used to calculate the fair value adjustments shown in the table above. The fair value adjustments and the related unobservable inputs were not considered significant for the year ended December 31, 2025.
Fair value estimates
The following table presents the carrying amount and fair value of the Company’s variable and non-variable interest rate debt (instruments defined in Note 13 – “Debt”), including current portion and excluding unamortized debt issuance costs. Fair value is estimated by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The interest rates of the variable interest rate long-term debt instruments are generally reset monthly.
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| 2021 Term Loan | $ | 2,157 | $ | 2,162 | $ | 2,157 | $ | 2,155 | |||||||||||||||
4.125% Senior Notes | 337 | 327 | 337 | 305 | |||||||||||||||||||
4.750% Senior Notes | 277 | 271 | 277 | 259 | |||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 24, 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.