Public Policy Holding Company, Inc.PPHC
Public Policy Holding Company, Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENT
The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of December 31, 2025:
| Level 1 | Level 2 | Level 3 | |||||||||||||||
Other liabilities | $ | — | $ | — | $ | 12,030 | |||||||||||
Contingent consideration | — | — | 12,998 | ||||||||||||||
Total liabilities | $ | — | $ | — | $ | 25,028 | |||||||||||
The following table presents a summary of the Company’s liabilities that are measured at fair value on a recurring basis by their respective fair value hierarchy level as of December 31, 2024:
| Level 1 | Level 2 | Level 3 | |||||||||||||||
Other liabilities | $ | — | $ | — | $ | 4,880 | |||||||||||
Contingent consideration | — | — | 10,896 | ||||||||||||||
Total liabilities | $ | — | $ | — | $ | 15,776 | |||||||||||
The carrying values of cash, contract receivables, and accounts payable and accrued expenses at December 31, 2025 and December 31, 2024 approximated their fair value due to the short maturity of these instruments.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
Contingent Consideration
The fair value of contingent consideration from the Company's acquisitions were measured using Level 3 inputs.
The following table summarized the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the year ended December 31, 2025 as follows:
| Balance at December 31, 2024 | $ | 10,896 | |||
| Cash and stock payout of contingent consideration | (582) | ||||
| Change in fair value | 5,147 | ||||
| Effect of currency translation adjustment | 42 | ||||
| Other adjustment | (2,505) | ||||
| Balance at December 31, 2025 | $ | 12,998 | |||
The following table summarized the change in fair value, as determined by Level 3 inputs, for the contingent consideration using the unobservable Level 3 inputs for the year ended December 31, 2024 as follows:
| Balance at December 31, 2023 | $ | 6,920 | |||
| Fair value at issuance | 3,798 | ||||
Cash and stock payout of contingent consideration | (1,709) | ||||
| Change in fair value | 1,910 | ||||
| Effect of currency translation adjustment | (23) | ||||
| Balance at December 31, 2024 | $ | 10,896 | |||
The estimated fair value of contingent consideration is calculated by Monte Carlo simulations utilize estimates including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates.
Other Liabilities
The fair value of other liabilities, comprising of post-combination compensation obligations of the Company, relates to various acquisitions. The estimated fair value of other liabilities is calculated by Monte Carlo simulations utilize estimates
including; expected volatility of future operating results, discount rates applicable to future results, and expected growth rates.
The following table summarized the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the year ended December 31, 2025 as follows:
| Balance at December 31, 2024 | $ | 4,880 | |||
Accretion of liability | 8,490 | ||||
| Changes in other liabilities | (1,714) | ||||
Stock issued for settlement of other liability | 342 | ||||
| Effect of currency translation adjustment | (3) | ||||
| Other adjustment | 35 | ||||
| Balance at December 31, 2025 | $ | 12,030 | |||
The following table summarized the change in fair value, as determined by Level 3 inputs, for the other liabilities using the Level 3 inputs for the year ended December 31, 2024 as follows:
| Balance at December 31, 2023 | $ | 2,120 | |||
| Accretion of other liability | 3,742 | ||||
| Other liabilities | (982) | ||||
| Balance at December 31, 2024 | $ | 4,880 | |||
The Monte Carlo assumptions and inputs (which are Level 3 inputs) are as follows for the years ended December 31, 2025 and 2024 are as follows:
| December 31, 2025 | |||||||||||
| Significant Input | Weighted Average Input | Input Range | |||||||||
| Discount rate for credit risk and time value | 4.5% | 4.4% to 4.8% | |||||||||
| Discount rate for future profit after tax | 15.1% | 11.3% to 19.4% | |||||||||
| Expected volatility of future annual profit after tax | 29.0% | 29.0% | |||||||||
| Discount Rate Applicable to Future Annual EBITDA | 15.0% | 14.4% to 15.5% | |||||||||
| Expected Volatility of Future Annual EBITDA | 30.5% | 29.0% to 32.0% | |||||||||
| Forecasted growth rate | 8.6% | 0.9% to 17.1% | |||||||||
| December 31, 2024 | |||||||||||
| Significant Input | Weighted Average Input | Input Range | |||||||||
| Discount rate for credit risk and time value | 5.2% | 5.2% to 5.4% | |||||||||
| Discount rate for future profit after tax | 16.4% | 11.5% to 21.3% | |||||||||
| Expected volatility of future annual profit after tax | 31.0% | 29.0% to 34.0% | |||||||||
| Forecasted growth rate | 8.9% | 4.9% to 70.8% | |||||||||
Financial Instruments that are not Measured at Fair Value on a Recurring Basis
The Notes Payable of the Company are subject to a variable interest rate and as such, the carrying amount closely approximates the fair value of this instrument.
Non-financial Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Certain non-financial assets are measured at fair value on a nonrecurring basis, primarily goodwill, intangible assets (Level 3 fair value measurements) and right-of-use lease assets (Level 2 fair value measurement). Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis but are subject to periodic evaluations for potential impairment.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.