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Fair Value Measurements
 12 Months Ended
Dec. 31, 2025
Fair Value Measurements  
Fair Value Measurements

10. Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, the Company follows a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

●Level 1: Quoted prices for identical instruments in active markets.
●Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations, in which all significant inputs are observable in active markets. The fair value of the Company’s debt reflects a Level 2 measurement and was estimated based on quoted prices for the Company’s debt instruments in an inactive market.
●Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Level 3 liabilities that are measured at fair value on a recurring basis consist of the Company’s contingent consideration related to the acquisition of Motto.

A summary of the Company’s liabilities measured at fair value on a recurring basis is as follows (in thousands):

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As of December 31, 2025

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As of December 31, 2024

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Fair Value

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Level 1

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Level 2

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Level 3

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Fair Value

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Level 1

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Level 2

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Level 3

Liabilities - Contingent consideration (a)

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$

1,275

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$

—

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$

—

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$

1,275

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$

2,175

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$

—

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$

—

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$

2,175

(a)Recorded as a component of “Accounts payable”, “Accrued liabilities” and “Other liabilities, net of current portion” in the accompanying Consolidated Balance Sheets.

The Company is required to pay additional purchase consideration totaling 8% of gross receipts collected by Motto each year (the “Revenue Share Year”) through September 30, 2026, with no limitation as to the maximum payout. The annual payment is required to be made within 120 days of the end of each Revenue Share Year. The fair value of the contingent purchase consideration represents the forecasted discounted cash payments that the Company expects to pay. Increases or decreases in the fair value of the contingent purchase consideration can result from changes in discount rates as well as the timing and amount of forecasted revenues. The forecasted revenue growth assumption that is most sensitive is the assumed franchise sales count for which the forecast assumes 30 franchise sales in the final Revenue Share Year. This assumption is based on historical sales and an assumption of growth over time. A 10% reduction in the number of franchise sales and a 1% change to the discount rate applied to the forecast would not substantially change the liability. As of December 31, 2025, the Company does not anticipate making any further cash payments for contingent consideration associated with the acquisition of Gadberry Group. The Company measures these liabilities each reporting period and recognizes changes in fair value, if any, in “Selling, operating and administrative expenses” in the accompanying Consolidated Statements of Income (Loss).

The table below presents a reconciliation of the contingent consideration (in thousands):

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Total

Balance at January 1, 2024

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$

2,760

Fair value adjustments

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(225)

Cash payments

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(360)

Balance at January 1, 2025

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$

2,175

Fair value adjustments

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(109)

Cash payments

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(791)

Balance at December 31, 2025

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$

1,275

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The Company assesses categorization of assets and liabilities by level at each measurement date, and transfers between levels are recognized on the actual date of the event or change in circumstances that caused the transfer. There were no transfers between Levels I, II and III during the year ended December 31, 2025.

The following table summarizes the carrying value and estimated fair value of the Senior Secured Credit Facility (in thousands):

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December 31, 2025

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December 31, 2024

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Carrying
Amount

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Fair Value
Level 2

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Carrying
Amount

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Fair Value
Level 2

Senior Secured Credit Facility

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$

436,751

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$

432,711

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$

440,843

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$

435,022

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