Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

As of December 31, the following financial liabilities are measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	2021		2020
Business acquisitions contingent consideration,    current	$	31,450	$	49,902
Business acquisitions contingent consideration,    long-term		4,350		4,565
Conversion option		23,081		20,886
Total	$	58,881	$	75,353

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:

	Level 3
		Business Acquisitions Contingent Consideration, Current			Business Acquisitions Contingent Consideration, Long-term			Conversion Option			Contingent Put Option			Warrant Options			Total
Balance—at January 1, 2019		$	2,754		$	—		$	—		$	—		$	12,818		$	15,572
Acquisitions			5,022			379			—			—			—			5,401
Changes in fair value included in    earnings			1,392			—			—			7,100			4,060			12,552
Payment of contingent consideration    payable			(554	)		—			—			—			—			(554	)
Balance—at December 31, 2019		$	8,614		$	379		$	—		$	7,100		$	16,878		$	32,971
Acquisitions			34,661			10,543			—			—			—			45,204
Series A-2 compound embedded option			—			—			(9,361	)		—			—			(9,361	)
Issuance of warrant option			—			—			—			—			30,097			30,097
Changes in fair value included in    earnings			19,119			(6,177	)		30,247			(19,240	)		9,312			33,261
Payment of contingent consideration    payable			(12,464	)		—			—			—			—			(12,464	)
Reclass of long term to short term    contingent liabilities			180			(180	)		—			—			—			—
Write off of the contingent put    option			—			—			—			12,140			—			12,140
Exercise of warrant options			—			—			—			—			(56,287	)		(56,287	)
Foreign currency translation of    contingent consideration payment			(208	)		—			—			—			—			(208	)
Balance—at December 31, 2020		$	49,902		$	4,565		$	20,886		$	—		$	—		$	75,353
Acquisitions			2,801			4,603			—			—			—			7,404
Series A-2 compound embedded option			—			—			2,195			—			—			2,195
Changes in fair value included in    earnings			14,111			10,261			—			—			—			24,372
Payment of contingent consideration    payable			(50,443	)		—			—			—			—			(50,443	)
Reclass of long term to short term    contingent liabilities			15,079			(15,079	)		—			—			—			—
Balance—at December 31, 2021		$	31,450		$	4,350		$	23,081		$	—		$	—		$	58,881

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

Business Acquisitions Contingent Consideration—The fair value of the contingent consideration payable associated with the acquisition of CTEH, MSE and Sensible was determined using a Monte Carlo simulation of earnings in a risk-neutral Geometric Brownian Motion framework. The fair values of the contingent consideration payables for all other acquisitions were calculated based on expected target achievement amounts, which are measured quarterly and then subsequently adjusted to actuals at the target measurement date. 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 earnout thresholds.

Conversion Option—The fair value of the embedded derivative associated with the issuance of the Convertible and Redeemable Series A-2 Preferred Stock (Note 18) 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. The considerable quantifiable inputs in the valuation relate to the timing of conversions or redemptions.

Contingent Put Option—The fair value of the contingent put option associated with the issuance of the Redeemable Series A-1 Preferred Stock 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 contingent put option. The difference between the two scenarios is the implied fair value of the embedded derivative, recorded as the contingent put option liability. In this case the Series A-1 was redeemed on the date of value so the value of the “with” scenario is known. The unobservable input is the required rate of return on the Series A-1 through to maturity in the “without” scenario. The contingent put option was redeemed in July 2020 (Note 17).

Warrant Options—The warrant options were exercised on July 30, 2020 (Note 13). The fair value of the warrant options associated with the issuance of the Redeemable Series A-1 Preferred Stock and the Convertible and Redeemable Series A-2 Preferred Stock was calculated based on the Black-Sholes pricing model using the following assumptions:

	July 30, 2020
Common stock value (per share)	$	22.22
Expected volatility		44.35	%
Risk-free interest rate		0.55	%
Expected life (years)		10

The method used to price these liabilities is considered Level 3 due to the subjective nature of the unobservable inputs (common stock value and expected volatility) used to determine the fair value.