Fair Value Measurements

12 Months Ended

Dec. 31, 2021

The Company complies with the provisions of ASC 820, which defines fair value, provides a framework for measuring fair value and expands the disclosures required for fair value measurements of financial and non-financial assets and liabilities. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:


			§			Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

			§			Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

			§			Level 3 – Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company’s money market funds are classified within Level 1. The Company values these Level 1 investments using quoted market prices. The fair value of long-term debt is determined using recent quoted market prices or dealer quotes for each of the Company’s instruments, which are Level 1 inputs. On October 7, 2021, we completed the Consensus separation and retained 19.9% of the shares of Consensus common stock immediately following the Separation. We did not retain a controlling interest in Consensus. The Retained Consensus Shares are equity securities for which the Company elected the fair value option, and the fair value of our retained shares and subsequent fair value changes are included in our assets of and results from continuing operations, respectively. At December 31, 2021, our investment in Consensus common stock was remeasured at fair value based on Consensus’ closing stock price, with unrealized gains of $298.5 million recorded in the Consolidated Statement of Operations and a balance of $229.2 million in the Consolidated Balance Sheet. The fair value of the investment in Consensus is determined using the quoted market prices, which is a Level 1 input.

Certain of the Company’s debt securities are classified within Level 2. The Company values these Level 2 investments based on model-driven valuations using significant inputs derived from or corroborated by observable market data.

The fair value of our senior notes was determined using quoted market prices or dealer quotes for instruments with similar maturities and other terms and credit ratings, which are Level 2 inputs. The fair value of the MUFG Credit Facility approximated its carrying amount due to its variable interest rate, which approximated a market interest rate, and was considered a Level 2 input. The fair value of the Company’s debt instruments was $1.3 billion and $2.0 billion, at December 31, 2021 and December 31, 2020, respectively (see Note 10 - Debt).

In 2019, the Company entered into a $5.5 million note payable that was short-term in nature and associated with the quarter’s acquisition activity. In the same year, the Company paid down $5.1 million of the outstanding note and in the third quarter of 2020, the balance of the note payable was paid in full.

The Company classifies its contingent consideration liability in connection with acquisitions within Level 3 because factors used to develop the estimated fair value are unobservable inputs, such as volatility and market risks, and are not supported by market activity. For similar reasons, certain of the Company’s available-for-sale debt securities were classified within Level 3. The valuation approaches used to value Level 3 investments considers unobservable inputs in the market such as time to liquidity, volatility, dividend yield and breakpoints. Significant increases or decreases in either of the inputs in isolation would result in a significantly lower or higher fair value measurement.

The following table presents the fair values, valuation techniques, unobservable inputs, and ranges of the Company’s financial liabilities categorized within Level 3. The weighted averages below are a product of the unobservable input and fair value of the contingent consideration arrangement as of December 31, 2021.


	Valuation Technique	Unobservable Input	Range	Weighted Average
Contingent Consideration	Option-Based Model	Risk free rate	1.9% - 2.2%	2.0	%
		Debt spread	0.0% - 74.7%	13.6	%
		Probabilities	10.0% - 100.0%	80.5	%
		Present value factor	2.2% - 26.9%	19.0	%
		Discount rate	27.3% - 38.0%	30.7	%

The following tables present the fair values of the Company’s financial assets or liabilities that are measured at fair value on a recurring basis (in thousands):


December 31, 2021	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	144,255	$	—	$	—	$	144,255	$	144,255






Investment in Consensus	229,200		—		—		229,200		229,200

Total assets measured at fair value	$	373,455	$	—	$	—	$	373,455	$	373,455

Liabilities:
Contingent consideration	$	—	$	—	$	5,775	$	5,775	$	5,775
Long-term debt	1,345,311		—		—		1,345,311		1,090,627
Total liabilities measured at fair value	$	1,345,311	$	—	$	5,775	$	1,351,086	$	1,096,402


December 31, 2020	Level 1		Level 2		Level 3		Fair Value		Carrying Value
Assets:
Cash equivalents:
Money market and other funds	$	10,413	$	—	$	—	$	10,413	$	10,413






Corporate debt securities	—		663		—		663		663
Total assets measured at fair value	$	10,413	$	663	$	—	$	11,076	$	11,076

Liabilities:
Contingent consideration	$	—	$	—	$	5,022	$	5,022	$	5,022
Long-term debt	1,960,527		—		—		1,960,527		1,579,021
Total liabilities measured at fair value	$	1,960,527	$	—	$	5,022	$	1,965,549	$	1,584,043

At the end of each reporting period, management reviews the inputs to the fair value measurements of financial and non-financial assets and liabilities to determine when transfers between levels are deemed to have occurred. For the year ended December 31, 2021, there were no transfers that occurred between levels. For the year ended December 31, 2020, the Company transferred the fair value of its long-term debt from Level 2 to Level 1.

The following tables presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):


	Level 3		Affected line item in the Statement of Income
Balance as of January 1, 2020	$	37,887
Contingent consideration	4,860
Total fair value adjustments reported in earnings	(80)		General and administrative
Contingent consideration payments	(37,645)		Not Applicable
Balance as of December 31, 2020	$	5,022
Contingent consideration	4,713
Total fair value adjustments reported in earnings	(1,910)		General and administrative
Contingent consideration payments	(2,050)		Not Applicable
Balance as of December 31, 2021	$	5,775

In connection with the Company’s other acquisition activity, contingent consideration of up to $14.9 million may be payable upon achieving certain future earnings before interest, taxes, depreciation and amortization (EBITDA), revenue, and/or unique visitor thresholds and had a combined fair value of $5.8 million and $5.0 million at December 31, 2021 and 2020, respectively. Due to the achievement of certain thresholds, $2.1 million and $37.6 million was paid during the years ended December 31, 2021 and 2020, respectively.

The Company recorded a net decrease of $1.9 million and $0.1 million during the years ended December 31, 2021 and 2020 respectively, in the fair value of the contingent consideration and reported such changes in general and administrative expenses.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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