Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10. Fair Value Measurements

The following table summarizes our assets and liabilities at March 31, 2019 and December 31, 2018 that are measured at fair value on a recurring basis subsequent to initial recognition and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value (in thousands):

	Level	March 31, 2019			December 31, 2018
Deferred compensation plan assets	1	$	95,983		$	84,435
Corporate and municipal bonds	1	$	59,687		$	56,556
Deferred compensation plan liabilities	1	$	(95,983	)	$	(84,435	)
Interest rate swaps	2	$	533		$	1,096
Contingent purchase price liabilities	3	$	(37,548	)	$	(39,708	)

During the three months ended March 31, 2019 and 2018, there were no transfers between the valuation hierarchy Levels 1, 2 and 3. The following table summarizes the change in Level 3 fair values of our contingent purchase price liabilities for the three months ended March 31, 2019 and 2018 (pre-tax basis) (in thousands):

	2019			2018
Beginning balance – January 1	$	(39,708	)	$	(37,574	)
Additions from business acquisitions		(1,806	)		(8,320	)
Settlement of contingent purchase price liabilities		3,685			2,879
Change in fair value of contingencies		502			(1,370	)
Change in net present value of contingencies		(221	)		(239	)
Ending balance – March 31	$	(37,548	)	$	(44,624	)

Contingent Purchase Price Liabilities – Contingent purchase price liabilities result from our business acquisitions and are recorded at fair value at the time of acquisition and are recorded in “Contingent purchase price liability — current” and “Contingent purchase price liability — non-current” in the accompanying Consolidated Balance Sheets. We estimate the fair value of our contingent purchase price liabilities using a probability-weighted discounted cash flow model. This fair value measure is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Fair value measurements characterized within Level 3 of the fair value hierarchy are measured based on unobservable inputs that are supported by little or no market activity and reflect our own assumptions in measuring fair value.

We probability weight risk-adjusted estimates of future performance of acquired businesses, then calculate the contingent purchase price based on the estimates and discount them to present value representing management’s best estimate of fair value. The fair value of the contingent purchase price liabilities are reassessed on a quarterly basis based on assumptions provided by practice group leaders and business unit controllers together with our corporate finance department. Any change in the fair value estimate is recorded in the earnings of that period. Refer to Note 14, Acquisitions, for further discussion of our acquisitions and contingent purchase price liabilities.

The carrying amounts of our cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short maturity of these instruments, and the carrying value of bank debt approximates fair value as the interest rate on the bank debt is variable and approximates current market rates. As a result, the fair value measurement of our bank debt is considered to be Level 2.