14. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following financial assets and liabilities are measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

 

 

December 31, 2025

 

 

December 31, 2024

 

Interest rate swap(1)

$

 

 

$

1,544

 

Total Assets

$

 

 

$

1,544

 

 

 

 

 

 

 

Business acquisitions contingent consideration, current

$

14,883

 

 

$

26,872

 

Business acquisitions contingent consideration, long-term

 

2,755

 

 

 

6,255

 

Conversion option

 

 

 

 

20,224

 

Interest rate swap (1)

 

429

 

 

 

 

Total Liabilities

$

18,067

 

 

$

53,351

 

 

(1) Included in other non-current liabilities and other assets in the consolidated statement of financial position as of December 31, 2025 and consolidated statement of financial position as of December 31, 2024, respectively.

The estimated fair value amounts shown above are not necessarily indicative of the amounts that the Company would realize upon disposition, nor do they indicate the Company’s intent or ability to dispose of the financial instrument.

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis:

 

 

Interest Rate Swap

 

 

Total Assets

 

 

Business Acquisitions Contingent Consideration, Current

 

 

Business Acquisitions Contingent Consideration, Long-term

 

 

Conversion Option

 

 

Interest Rate Swap

 

 

Total Liabilities

 

Balance as of December 31, 2022

$

6,046

 

 

$

6,046

 

 

$

3,801

 

 

$

4,454

 

 

$

25,731

 

 

$

 

 

$

33,986

 

Acquisitions

 

 

 

 

 

 

 

397

 

 

 

730

 

 

 

 

 

 

 

 

 

1,127

 

Changes in fair value included in earnings

 

(2,585

)

 

 

(2,585

)

 

 

(174

)

 

 

(22

)

 

 

(6,714

)

 

 

 

 

 

(6,910

)

Payment of contingent consideration payable

 

 

 

 

 

 

 

(3,146

)

 

 

 

 

 

 

 

 

 

 

 

(3,146

)

Reclass of long term to short term contingent liabilities

 

 

 

 

 

 

 

2,714

 

 

 

(2,714

)

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2023

$

3,461

 

 

$

3,461

 

 

$

3,592

 

 

$

2,448

 

 

$

19,017

 

 

$

 

 

$

25,057

 

Acquisitions

 

 

 

 

 

 

 

5,104

 

 

 

22,899

 

 

 

 

 

 

 

 

 

28,003

 

Changes in fair value included in earnings

 

(1,917

)

 

 

(1,917

)

 

 

1,879

 

 

 

(1,345

)

 

 

1,207

 

 

 

 

 

 

1,741

 

Payment of contingent consideration payable

 

 

 

 

 

 

 

(1,450

)

 

 

 

 

 

 

 

 

 

 

 

(1,450

)

Reclass of long term to short term contingent liabilities

 

 

 

 

 

 

 

17,747

 

 

 

(17,747

)

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2024

$

1,544

 

 

$

1,544

 

 

$

26,872

 

 

$

6,255

 

 

$

20,224

 

 

$

 

 

$

53,351

 

Changes in fair value included in earnings

 

(1,544

)

 

 

(1,544

)

 

 

(180

)

 

 

1,080

 

 

 

(20,224

)

 

 

429

 

 

 

(18,895

)

Payment of contingent consideration payable

 

 

 

 

 

 

 

(17,937

)

 

 

 

 

 

 

 

 

 

 

 

(17,937

)

Reclass of long term to short term contingent liabilities

 

 

 

 

 

 

 

4,580

 

 

 

(4,580

)

 

 

 

 

 

 

 

 

 

Measurement period adjustment

 

 

 

 

 

 

 

1,548

 

 

 

 

 

 

 

 

 

 

 

 

1,548

 

Balance as of December 31, 2025

$

 

 

$

 

 

$

14,883

 

 

$

2,755

 

 

$

 

 

$

429

 

 

$

18,067

 

Quantitative Information about Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3):

Interest Rate Swaps—The interest rate swaps fair value is estimated based on a mid-market price for the swap as of the close of business of the reporting period. The fair value is prepared by discounting future cash flows of the swaps to arrive at a current value of the swap. Forward curves and volatility levels inputs are determined on the basis of observable market inputs when available and on the basis of estimates when observable market inputs are not available. The Company does not apply hedge accounting but instead recognizes the instrument at fair value on the consolidated statement of financial position within other assets, with changes in fair value recognized as other income (expense) in each reporting period.

Business Acquisitions Contingent Consideration—The fair values of the contingent consideration payables resulted from acquisitions were calculated based on expected target achievement amounts, which are measured quarterly and then subsequently adjusted to actuals at the target measurement date. Prior to the second quarter of 2023, the fair value of the contingent consideration payable associated with the acquisition of Sensible was determined using a Monte Carlo simulation of earnings in a risk-neutral Geometric Brownian Motion framework. As of December 31, 2023, the Sensible earnout was expected to be achieved in full and therefore, the entire payable has been recorded. The method used to price these liabilities is considered level 3 due to the subjective nature of the unobservable inputs used to determine the fair value. The input is the expected achievement of earn-out thresholds.

Conversion Option—The fair value of the conversion option associated with the issuance of the Convertible and Redeemable Series A-2 Preferred Stock (Note 16) was estimated using a “with-and-without” method. The “with-and-without” methodology considers the value of the security on an as-is basis and then without the embedded conversion premium. The difference between the two scenarios is the implied fair value of the embedded derivative. The unobservable input is the

required rate of return on the Series A-2 Preferred Stock. The considerable quantifiable inputs in the valuation relate to the timing of conversions or redemptions.

Historical Timeline

Fiscal YearFiled
2025Feb 26, 2026Showing above
2024Mar 3, 2025
2023Feb 29, 2024
2022Mar 1, 2023
2021Mar 1, 2022
2020Mar 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.