Marcus & Millichap, Inc.MMI
Marcus & Millichap, Inc. Fair Value Disclosure
Fair Value Measurements
Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets held in rabbi trust | $ | 13,476 | $ | — | $ | 13,476 | $ | — | $ | 12,191 | $ | — | $ | 12,191 | $ | — | |||||||||||||||||||||||||||||||
| Convertible notes | $ | 5,630 | $ | — | $ | — | $ | 5,630 | $ | 6,347 | $ | — | $ | — | $ | 6,347 | |||||||||||||||||||||||||||||||
Cash equivalents (1): | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial paper | $ | 2,396 | $ | — | $ | 2,396 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Money market funds | 78,686 | 78,686 | — | — | 90,737 | 90,737 | — | — | |||||||||||||||||||||||||||||||||||||||
| $ | 81,082 | $ | 78,686 | $ | 2,396 | $ | — | $ | 90,737 | $ | 90,737 | $ | — | $ | — | ||||||||||||||||||||||||||||||||
| Marketable debt securities, available-for-sale: | |||||||||||||||||||||||||||||||||||||||||||||||
| Short-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. treasuries | $ | — | $ | — | $ | — | $ | — | $ | 29,517 | $ | 29,517 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Corporate debt | 90,564 | — | 90,564 | — | 160,150 | — | 160,150 | — | |||||||||||||||||||||||||||||||||||||||
| ABS and other | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| $ | 90,564 | $ | — | $ | 90,564 | $ | — | $ | 189,667 | $ | 29,517 | $ | 160,150 | $ | — | ||||||||||||||||||||||||||||||||
| Long-term investments: | |||||||||||||||||||||||||||||||||||||||||||||||
| U.S. treasuries | $ | 29,259 | $ | 29,259 | $ | — | $ | — | $ | 773 | $ | 773 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| U.S. government sponsored entities | 2,461 | — | 2,461 | — | 929 | — | 929 | — | |||||||||||||||||||||||||||||||||||||||
| Corporate debt | 54,257 | — | 54,257 | — | 30,934 | — | 30,934 | — | |||||||||||||||||||||||||||||||||||||||
| ABS and other | 59,724 | — | 59,724 | — | 18,511 | — | 18,511 | — | |||||||||||||||||||||||||||||||||||||||
| $ | 145,701 | $ | 29,259 | $ | 116,442 | $ | — | $ | 51,147 | $ | 773 | $ | 50,374 | $ | — | ||||||||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration | $ | 720 | $ | — | $ | — | $ | 720 | $ | 4,731 | $ | — | $ | — | $ | 4,731 | |||||||||||||||||||||||||||||||
| Deferred consideration | $ | — | $ | — | $ | — | $ | — | $ | 411 | $ | — | $ | 411 | $ | — | |||||||||||||||||||||||||||||||
| Deferred compensation liability | $ | 9,786 | $ | 9,786 | $ | — | $ | — | $ | 8,304 | $ | 8,304 | $ | — | $ | — | |||||||||||||||||||||||||||||||
(1)Included in cash, cash equivalents, and restricted cash on the accompanying consolidated balance sheets.
There were no transfers in or out of Level 3 during the years ended December 31, 2025 and 2024.
Contingent and Deferred Consideration
During the year ended December 31, 2025, the Company considered current interest rates and the probability of achieving EBITDA and other performance targets in its determination of fair value for the contingent consideration. The Company is uncertain as to the extent of the volatility in the unobservable inputs in the foreseeable future. Deferred consideration in connection with acquisitions is carried at fair value and calculated using a discounted cash flow estimate with the only remaining condition on such payments being the passage of time.
As of December 31, 2025 and December 31, 2024, contingent and deferred consideration had a maximum undiscounted payment to be settled in cash or stock of $6.8 million and $12.0 million, respectively. Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these payments will be made over the next two years. Changes in fair value are included in selling, general and administrative expense in the consolidated statements of operations.
A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 4,731 | $ | 5,482 | |||||||
Change in fair value of contingent consideration(1) | 788 | 43 | |||||||||
| Payments of contingent consideration | (4,799) | (794) | |||||||||
| Ending balance | $ | 720 | $ | 4,731 | |||||||
(1)Includes immaterial impact of foreign currency translation.
Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):
| Fair Value at December 31, 2025 | Valuation Technique | Unobservable inputs | Range (Weighted Average)(1) | ||||||||||||||||||||||||||
Contingent consideration | $ | 720 | Discounted cash flow | Expected life of cash flows | 1.0-1.8 years | (1.0 year) | |||||||||||||||||||||||
| Discount rate | 5.2%-5.2% | (5.2%) | |||||||||||||||||||||||||||
| Probability of achievement | 0.3%-100.0% | (99.8%) | |||||||||||||||||||||||||||
| Fair Value at December 31, 2024 | Valuation Technique | Unobservable inputs | Range (Weighted Average)(1) | ||||||||||||||||||||||||||
Contingent consideration | $ | 4,731 | Discounted cash flow | Expected life of cash flows | 0.3-2.8 years | (0.4 years) | |||||||||||||||||||||||
| Discount rate | 4.8%-6.1% | (5.9%) | |||||||||||||||||||||||||||
| Probability of achievement | 0.0%-100.0% | (98.2%) | |||||||||||||||||||||||||||
(1)Unobservable inputs were weighted by the relative fair value of the instruments.
Convertible Notes
The fair value of the convertible notes considered (i) accrued interest rates between 6% and 10%, (ii) a net weighted average maturity of 0.3 years which may be extended at the option of the holders, (iii) the expected likelihood of occurrence of various scenarios including financing, equity financing, change in control, or liquidation, (iv) a net weighted average settlement of 98% considering premiums from potential conversion into equity and losses from potential liquidation, and (v) discounted cash flow at a weighted average discount rate of 13.5%. During the year ended December 31, 2025, the fair value of the convertible notes decreased by approximately $0.7 million primarily due to a
change in likelihood of occurrence of the various scenarios and a decrease in the net settlement rate. The estimated time to settlement changed from a weighted average of 0.77 years as of December 31, 2024 to 0.27 years as of December 31, 2025.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 15, 2016 | |
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.