Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2018

15. Fair Value of Financial Instruments

Certain financial instruments that are not carried at fair value on the consolidated statements of financial condition are carried at amounts that approximate fair value. These instruments include deposits with clearing organizations and accounts receivable.

Following is a description of the fair value methodologies used for the Company's instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:

The Company's money market funds are classified within level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Contingent consideration is classified within level 3 of the fair value hierarchy because the valuation requires assumptions that are both significant and unobservable. The contingent consideration valuation is determined using a monte carlo simulation, with key inputs being the standard deviation applied to the Company's new credit platforms' revenues, revenue multiple and discount rate. At December 31, 2017, the inputs in the valuation are as follows:


Standard deviation	$	1,666,667
Revenue multiple		7.03x
Discount rate		1.64	%

The Company has no instruments that are classified within level 2 of the fair value hierarchy.

The fair value measurements are as follows (in thousands):


	Quoted Prices in
	active Markets		Significant		Significant
	for Indentical		Observable		Unobservable
	Assets		Inputs		Inputs
Predecessor	(Level 1)		(Level 2)		(Level 3)		Total
As of December 31, 2017
Assets
Money market funds	$	101,154	$	—	$	—	$	101,154
	$	101,154	$	—	$	—	$	101,154
Liabilities
Contingent consideration payable	$	—	$	—	$	129,393	$	129,393
	$	—	$	—	$	129,393	$	129,393

Successor
As of December 31, 2018
Assets
Money market funds	$	127,927	$	—	$	—	$	127,927
	$	127,927	$	—	$	—	$	127,927

- 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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