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Fair Value

12 Months Ended

Dec. 31, 2020

Fair value is the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

The market approach is applied for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value balances are classified based on the observability of those inputs.

A fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Level 2 measurements utilize observable inputs in active markets for similar assets and liabilities, or, quoted prices in markets that are not active.

In estimating the fair value, we used the following methods and assumptions:

Cash and Cash Equivalents

For cash and cash equivalents, the carrying value is a reasonable estimate of fair value due to the short-term nature of the instruments.

Restricted Cash

Restricted cash is comprised of deposits that are pledged for various letters of credit/bank guarantees secured by us, escrow accounts due to acquisitions and divestitures, as well as short-term investments within our deferred compensation plan trust. We deem the carrying value to be a reasonable estimate of fair value due to the nature of these instruments.

Other Investments

Other investments are currently comprised of a minority equity investment in a foreign enterprise which we measure at cost and adjust to fair value on a quarterly basis when there are observable price changes in orderly transactions for the identical, or similar, investments. Changes in fair value are recorded within gain/(loss) on investments and other, net, in our consolidated statement of operations.

Contingent Consideration

The fair value of the contingent consideration was estimated using the Monte-Carlo simulation method, which relies on significant assumptions and estimates, including discount rates and future market conditions, among others.

Long-Term Debt

The fair value of long-term debt was estimated based on the current rates available to us for similar debt of the same remaining maturities and consideration of our default and credit risk.

Swaps

The fair value of the Swaps was estimated based on market value quotes received from the counterparties to the agreements adjusted for credit-risk.

The fair values of our financial instruments as of December 31, 2020 are presented in the following table:


	Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents	$	167,422	$	—	$	—	$	167,422
Restricted cash	8,713		1,698		—		10,411
Other investments	—		3,523		—		3,523
Total	$	176,135	$	5,221	$	—	$	181,356

Financial Liabilities:
Contingent consideration	$	—	$	—	$	—	$	—
Total debt	—		$	1,889,812	—		1,889,812
Total	$	—	$	1,889,812	$	—	$	1,889,812

Derivatives:
Asset for Swaps	$	—	$	29	$	—	$	29
Liability for Swaps	$	—	$	80,426	$	—	$	80,426

The fair values of our financial instruments as of December 31, 2019 are presented in the following table:


	Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Cash and cash equivalents	$	104,162	$	—	$	—	$	104,162
Restricted cash	9,791		725		—		10,516
Other investments	—		1,898		—		1,898
Total	$	113,953	$	2,623	$	—	$	116,576

Financial Liabilities:
Contingent consideration	$	—	$	—	$	—	$	—
Total debt	—		1,690,731		—		1,690,731
Total	$	—	$	1,690,731	$	—	$	1,690,731

Derivatives:
Asset for Swaps	$	—	$	572	$	—	$	572
Liability for Swaps	$	—	$	47,691	$	—	$	47,691

The following non-financial instruments were measured at fair value, on a non-recurring basis, as of and for the year ended December 31, 2020:


			Fair Value Measurements Using
(in thousands)	Remaining Fair Value (1)		Level 1		Level 2		Level 3		Impairment Losses


Property and equipment, net	$	—	$	—	$	—	$	—	$	1,228
Operating lease assets	—		—		—		—		1,081
	$	—	$	—	$	—	$	—	$	2,309

(1)Remaining fair value represents the post-impairment fair value related to the specifically impaired asset(s)

Impairment charges of $1.2 million attributable to property and equipment, net were recorded for the year ended December 31, 2020 related to capitalized software in our UWS segment. Impairment charges of $1.1 million attributable to operating lease assets were recorded for the year ended December 31, 2020 related to a right-of-use asset.

The following non-financial instruments were measured at fair value, on a non-recurring basis, as of and for the year ended December 31, 2019:


			Fair Value Measurements Using
(in thousands)	Remaining Fair Value (1)		Level 1		Level 2		Level 3		Impairment Losses
Property and equipment, net	$	—	$	—	$	—	$	—	$	12,312
Other intangible assets, net	—		—		—		—		35,600
Investment in affiliates, net	—		—		—		—		1,511
	$	—	$	—	$	—	$	—	$	49,423

(1)Remaining fair value represents the post-impairment fair value related to the specifically impaired asset(s)

Impairment charges of $12.3 million attributable to property and equipment, net were recorded for the year ended December 31, 2019 primarily related to capitalized software in our UWS segment due to business transformation activities of our appraisal management company. Impairment charges of $35.6 million were recorded for the year ended December 31, 2019

attributable to other intangible assets, net, due to business transformation activities of our appraisal management company within our UWS segment and include $32.3 million for client lists and $3.3 million for licenses. Impairment charges of $1.5 million were recorded for the year ended December 31, 2019 due to other-than-temporary losses in value from the absence of an ability to recover the carrying amount of the investments.

The following non-financial instruments were measured at fair value, on a non-recurring basis, as of and for the year ended December 31, 2018:


			Fair Value Measurements Using
(in thousands)	Remaining Fair Value (1)		Level 1		Level 2		Level 3		Impairment Losses
Property and equipment, net	$	—	$	—	$	—	$	—	$	7,687

(1)Remaining fair value represents the post-impairment fair value related to the specifically impaired asset(s)

Impairment charges of $7.7 million attributable to property and equipment, net, were recorded for the year ended December 31, 2018 primarily related to capitalized software in our UWS segment due to business transformation activities of our appraisal management company.

Due to observable price changes in an inactive market, we recorded a fair value adjustment of $6.6 million to lower the carrying amount of a minority equity investment for the year ended December 31, 2019, which amount was recorded within gain/(loss) on investments and other, net, in our consolidated statement of operations. As a result of the observable price change in 2019, we transferred the minority equity investment classification from Level 3 to Level 2 within the fair value hierarchy above.

Contingent Considerations

In connection with the 2019 acquisition of NTS, we entered into a contingent consideration agreement for up to $7.5 million in cash based upon certain revenue targets in fiscal years 2020 and 2021. This contingent consideration has been assessed with no fair value as of December 31, 2020 and 2019 using the Monte-Carlo simulation model.

In connection with the 2017 acquisition of Myriad Development, Inc., we entered into a contingent consideration agreement for up to $3.0 million in cash payable in 2022 upon the achievement of certain revenue targets ending fiscal year 2021. This contingent payment was originally recorded at a fair value of $1.8 million using the Monte-Carlo simulation model. The contingent payment is remeasured at fair value quarterly, and changes are recorded within income/(loss) on investments and other, net in our consolidated statements of operations. During the year ended December 31, 2018, we decreased the fair value of our contingent consideration by $1.5 million and recorded the gain in our consolidated statement of operations.

- 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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