Fair Value Measurements
|12 Months Ended|
Dec. 31, 2020
|Fair Value Disclosures [Abstract]|
|Fair Value Measurements||
Note 5. Fair Value Measurements
There were no transfers into or out of Level III during the year ended December 31, 2020. The changes in the fair value of contingent consideration are summarized below (in thousands):
As of the acquisition date of HunchLab (see Note 4, Business Acquisitions) and as of December 31, 2018, the Company estimated, based on (i) the probability of achieving the relevant revenues targets and (ii) the timing of achieving such targets, that the fair value of the contingent consideration approximates the maximum amount payable. There was no change in fair value during the years ended December 31, 2020 and 2019. In January 2020, the Company paid $0.3 million based on revenues generated over the first year of the contingent earnout period. In February 2021, subsequent to December 31, 2020, the Company paid the remaining $0.4 million of the contingent earnout based on revenues generated over the second year of the contingent earnout period.
Using a Monte Carlo Simulation approach, the Company estimated the fair value of the contingent consideration at the acquisition date of LEEDS to be $0.2 million. The Company estimated cash flows relevant to the revenue targets over the contingent consideration period fiscal years 2021 and 2022. The asset volatilities used in the model ranged from 34.2% to 54.5%. The revenue volatilities used in the model ranged from 8.3% to 13.2%.
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.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef