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Fair Value Measurement

9 Months Ended

Sep. 30, 2022

The following table provides the assets and liabilities carried at fair value measured on a recurring basis at September 30, 2022 and December 31, 2021 (in thousands):


	Fair Value Measurements at September 30, 2022
	Carrying Value		Level 1		Level 2		Level 3


Liabilities:
Put option of noncontrolling shareholders (1)	$	(142)	$	—	$	—	$	(142)
Contingent consideration - acquisition (2)	(1,600)		—		—		(1,600)

Total recorded at fair value	$	(1,742)	$	—	$	—	$	(1,742)

(1)Represents put option issued to noncontrolling shareholders in connection with the 5.11 acquisition.

(2) Represents potential earn-out payable as additional purchase price consideration by Velocity in connection with an acquisition.


	Fair Value Measurements at December 31, 2021
	Carrying Value		Level 1		Level 2		Level 3
Liabilities:
Put option of noncontrolling shareholders (1)	$	(151)	$	—	$	—	$	(151)
Contingent consideration - acquisition (2)	(1,350)		—		—		(1,350)


Total recorded at fair value	$	(1,501)	$	—	$	—	$	(1,501)

(1)Represents a put option issued to a noncontrolling shareholder in connection with the 5.11 acquisition.

(2)Represents potential earn-out payable as additional purchase price consideration by Altor in connection with the acquisition of Polyfoam. The payment of the earn-out occurred on March 31, 2022.

Reconciliations of the change in the carrying value of the Level 3 fair value measurements from January 1, 2021 through September 30, 2022 are as follows (in thousands):


	Level 3
Balance at January 1, 2021	$	(1,785)
Termination of put option of noncontrolling shareholder - Liberty	314
Increase in the fair value of put option of noncontrolling shareholder - 5.11	(30)
Balance at December 31, 2021	$	(1,501)
Decrease in the fair value of put option of noncontrolling shareholder - 5.11	9
Payment of contingent consideration - Polyfoam	1,350
Contingent consideration - Velocity acquisition	(1,600)
Balance at September 30, 2022	$	(1,742)

Valuation Techniques

The Company has not changed its valuation techniques in measuring the fair value of any of its other financial assets and liabilities during the period. For details of the Company’s fair value measurement policies under the fair value hierarchy, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Nonrecurring Fair Value Measurements

There were no assets or liabilities measured on a non-recurring basis during the nine months ended September 30, 2022 or the year ended December 31, 2021.

- 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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