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Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 10. Fair Value Measurements

Financial Instruments not recognized at Fair Value

The Company measures certain liabilities at fair value on a recurring basis, which are discussed below. Our financial instruments not recognized at fair value were as follows:

 

 

 

As of June 30,

 

 

As of December 31, 2023

 

 

 

 

 

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

 

Fair Value Level

 

 

Reference

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due from related party - Advisory Agreements

 

$

58,486

 

 

$

34,949

 

 

$

49,877

 

 

$

49,877

 

 

3

 

 

 Note 12

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Obligations

 

$

300,631

 

 

$

300,631

 

 

$

289,844

 

 

$

289,844

 

 

2

 

 

 Note 11

As of June 30, 2024 and December 31, 2023, debt obligations' carrying value approximates fair value.

Earnouts associated with the acquisitions of Bonaccord and Hark

Included in total consideration of the acquisition of Bonaccord is an earnout payment not to exceed $20 million. The amount ultimately owed to the sellers is based on achieving specific fundraising targets and any amounts paid to the sellers will be paid by October 2027, at which point the earnout expires. Payments are made after each close. As of June 30, 2024, $14.4 million has been paid in total contingent consideration associated with the earnout, of which $1.2 million was paid in the six months ended June 30, 2024. Total remeasurement expense recognized for the three and six months ended June 30, 2024 was $0.1 million and $0.1 million, respectively. Total remeasurement expense recognized for the three and six months ended June 30, 2023 was $0.1 million and $0.5 million, respectively. This is included in contingent consideration expense on the Consolidated Statements of Operations. The Company's contingent consideration is considered to be a Level 3 fair value measurement as the significant inputs are unobservable and require significant judgment or estimation. The remainder of the earnout is highly probable to be achieved given the fundraising amount to date and projected fundraising should satisfy the targets. As of June 30, 2024, the estimated fair value of the remaining contingent consideration totaled $5.6 million. Following June 30, 2024, the Company has paid $1.3 million towards the remaining contingent consideration.

Included in the total consideration of the acquisition of Hark is an earnout not to exceed $5.4 million. Total remeasurement expense recognized for the three and six months ended June 30, 2024 totaled $0 and $0, respectively. Total remeasurement expense recognized for the three and six months ended June 30, 2023, respectively, totaled $0 and $0.1 million, which was included in contingent consideration expense on the Consolidated Statements of Operations. The entirety of the Hark contingent consideration of $5.4 million was paid during the year ended December 31, 2023.

The following tables provide details regarding the classification of these liabilities within the fair value hierarchy as of the dates presented:

 

 

 

As of June 30,

 

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration obligation

 

$

-

 

 

$

-

 

 

$

5,570

 

 

$

5,570

 

Total liabilities

 

$

-

 

 

$

-

 

 

$

5,570

 

 

$

5,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023

 

 

 

Level I

 

 

Level II

 

 

Level III

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Contingent consideration obligation

 

$

-

 

 

$

-

 

 

$

6,693

 

 

$

6,693

 

Total liabilities

 

$

-

 

 

$

-

 

 

$

6,693

 

 

$

6,693

 

For the liabilities presented in the tables above, there were no changes in fair value hierarchy levels during the six months ended June 30, 2024 and December 31, 2023.

The changes in the fair value of Level III financial instruments are set forth below:

 

Contingent Consideration Liability

 

 

 

 

 

For the Six Months Ended June 30,

 

 

 

 

 

 

 

2024

 

 

2023

 

Balance, beginning of year:

 

 

 

 

 

$

6,693

 

 

$

17,337

 

Change in fair value

 

 

 

 

 

 

121

 

 

 

470

 

   Settlements

 

 

 

 

 

 

(1,244

)

 

 

(1,588

)

Balance, end of period:

 

 

 

 

 

$

5,570

 

 

$

16,219

 

The fair value of the contingent consideration liability represents the fair value of future payments upon satisfaction of performance targets. The assumptions used in the analysis are inherently subjective; therefore, the ultimate amount of the contingent consideration liability primarily relate to the expected future payments of obligations with a discount rate applied. The contingent consideration liability is included in contingent consideration on the Consolidated Balance Sheets. Changes in the fair value of the liability are included in contingent consideration expense on the Consolidated Statements of Operations.