| Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
The Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | As of September 30, 2023 | | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | | Assets | | | | | | | | Money market investments (1) | $ | — | | | $ | 39,740 | | | $ | — | | | $ | 39,740 | | Marketable equity securities (2) | 665,514 | | | — | | | — | | | 665,514 | | Other current investments (3) | 6,799 | | | 33 | | | — | | | 6,832 | | | | | | | | | | Total Financial Assets | $ | 672,313 | | | $ | 39,773 | | | $ | — | | | $ | 712,086 | | Liabilities | | | | | | | | | | | | | | | | Contingent consideration liabilities (4) | $ | — | | | $ | — | | | $ | 3,080 | | | $ | 3,080 | | Interest rate swaps (5) | — | | | 733 | | | — | | | 733 | | Mandatorily redeemable noncontrolling interest (6) | — | | | — | | | 32,043 | | | 32,043 | | Total Financial Liabilities | $ | — | | | $ | 733 | | | $ | 35,123 | | | $ | 35,856 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | As of December 31, 2022 | | (in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | Assets | | | | |
| | | Money market investments (1) | $ | — | | | $ | 7,686 | | | $ | — | | | $ | 7,686 | | Marketable equity securities (2) | 609,921 | | | — | | | — | | | 609,921 | | Other current investments (3) | 7,471 | | | 5,016 | | | — | | | 12,487 | | Interest rate swaps (7) | — | | | 2,636 | | | — | | | 2,636 | | Total Financial Assets | $ | 617,392 | | | $ | 15,338 | | | $ | — | | | $ | 632,730 | | Liabilities | | | | |
| | | | | | | | | | | Contingent consideration liabilities (5) | $ | — | | | $ | — | | | $ | 8,423 | | | $ | 8,423 | | | | | | | | | | Foreign exchange swap (8) | — | | | 333 | | | — | | | 333 | | Mandatorily redeemable noncontrolling interest (6) | — | | | — | | | 30,845 | | | 30,845 | | Total Financial Liabilities | $ | — | | | $ | 333 | | | $ | 39,268 | | | $ | 39,601 | |
____________ | | | | | | (1) | The Company’s money market investments are included in cash and cash equivalents and the value considers the liquidity of the counterparty. | (2) | The Company’s investments in marketable equity securities are held in common shares of U.S. corporations that are actively traded on U.S. stock exchanges. Price quotes for these shares are readily available. | (3) | Includes U.S. Government Securities, corporate bonds, mutual funds and time deposits. These investments are valued using a market approach based on the quoted market prices of the security or inputs that include quoted market prices for similar instruments and are classified as either Level 1 or Level 2 in the fair value hierarchy. | (4) | Included in Accounts payable, vehicle floor plan payable and accrued liabilities and Other Liabilities. The Company determined the fair value of the contingent consideration liabilities using either a Monte Carlo simulation, Black-Scholes model, or probability-weighted analysis depending on the type of target included in the contingent consideration requirements (revenue, EBITDA, client retention). All analyses included estimated financial projections for the acquired businesses and acquisition-specific discount rates. | (5) | Included in Other Liabilities. The Company utilized a market approach model using the notional amount of the interest rate swaps multiplied by the observable inputs of time to maturity and market interest rates. | (6) | The fair value of the mandatorily redeemable noncontrolling interest is based on the fair value of the underlying subsidiaries owned by GHC One and GHC Two, after taking into account any debt and other noncontrolling interests of its subsidiary investments. The fair value of the owned subsidiaries is determined using enterprise value analyses which include an equal weighing between guideline public company and discounted cash flow analyses. | (7) | Included in Deferred charges and other assets. The Company utilized a market approach model using the notional amount of the interest rate swap multiplied by the observable inputs of time to maturity and market interest rates. | (8) | Included in Accounts payable, vehicle floor plan payable and accrued liabilities, and valued based on a valuation model that calculates the differential between the contract price and the market-based forward rate. |
|
| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation |
The following tables provide a reconciliation of changes in the Company’s financial liabilities measured at fair value on a recurring basis, using Level 3 inputs: | | | | | | | | | | | | | (in thousands) | Contingent consideration liabilities | | Mandatorily redeemable noncontrolling interest | As of December 31, 2022 | $ | 8,423 | | | $ | 30,845 | | | Acquisition of business | 220 | | | — | | Changes in fair value (1) | (5,157) | | | 1,421 | | Capital contributions | — | | | 84 | | Accretion of value included in net income (1) | 856 | | | — | | Settlements or distributions | (1,262) | | | (307) | | | | | | As of September 30, 2023 | $ | 3,080 | | | $ | 32,043 | |
| | | | | | | | | | | | | (in thousands) | Contingent consideration liabilities | | Mandatorily redeemable noncontrolling interest | | As of December 31, 2021 | $ | 14,881 | | | $ | 13,661 | | | Acquisition of business | 397 | | | — | | Changes in fair value (1) | (5,036) | | | 12,799 | | Capital contributions | — | | | 922 | | Accretion of value included in net income (1) | 1,139 | | | — | | Settlements or distributions | (1,750) | | | (240) | | | | | | | As of September 30, 2022 | $ | 9,631 | | | $ | 27,142 | |
____________ | | | | | | | (1) | Changes in fair value and accretion of value of contingent consideration liabilities are included in Selling, general and administrative expenses and the changes in fair value of mandatorily redeemable noncontrolling interest is included in Interest expense in the Company’s Condensed Consolidated Statements of Operations. |
|