9. Purchase Price Obligations
On a quarterly basis, we reassess our current estimates of
performance relative to the stated targets, and adjust the
liability to fair value. Adjustments are recorded in
“Acquisition, severance and transition costs” in the
unaudited Condensed Consolidated Statement of Operations.
Changes in the fair value of purchase price obligations during the
nine months ended September 30, 2016:
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Fair value, January 1 (2)
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$ |
8.8 |
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Fair value of acquisition liabilities paid
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(7.4 |
) |
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Fair value of consideration issued
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4.1 |
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Change in fair value (1)
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(0.1 |
) |
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Fair value, September 30 (2)
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$ |
5.4 |
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| (1) |
Change in fair value includes a $0.9
million reduction during the third quarter due to a change in
assumptions utilized in the calculation of purchase price
obligations. |
| (2) |
Purchase price obligations may be
settled, at our option, in either cash or an equivalent amount of
common shares based upon their then-current market value, if
certain performance criteria had been met. |
The following table presents quantitative information about Level 3
fair value measurements as of September 30, 2016:
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Fair Value |
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Valuation Technique |
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Unobservable Inputs |
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Earnout liabilities
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$ |
4.6 |
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Income approach |
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Discount rate –
19.5% |
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Stock distribution price floor
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0.8 |
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Monte Carlo simulation |
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Volatility – 60% |
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Risk free rate – 1.2%
Dividend yield – 0%
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Fair value
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$ |
5.4 |
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