v3.22.1
Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2021
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
Cash and cash equivalents, accounts receivable, inventories, prepaid expenses and other current assets, accounts payable, salaries and benefits payable, accrued interest, other accrued expenses and current liabilities are reflected on the condensed consolidated balance sheets at amounts that approximate fair value because of the short-term nature of these financial assets and liabilities.
The fair value of the Company’s debt approximates its carrying value and is classified as a Level 2 fair value in the fair value hierarchy as it is based on discounted cash flows using a current borrowing rate.

The private warrants were valued using a modified Black-Scholes OPM, which is considered to be a Level 3 fair value measurement. Refer to Note P for information on the Level 3 inputs used to value the private warrants.

As of September 30, 2021, contingent consideration consists of estimated future payments related to the Successor’s acquisition of Roccor. As certain inputs are not observable in the market, contingent consideration payments are classified as Level 3 instruments and included in notes payable to seller on the Successor’s condensed consolidated balance sheets. Significant changes in the significant unobservable inputs used in the Black-Scholes OPM to determine the fair value of contingent consideration would result in a significantly lower or higher fair value measurement. The Company adjusts the previous fair value estimate of contingent consideration at each reporting period while considering changes in forecasted financial performance and overall change in risk based on the period of time elapsed. Refer to Note C for information on the Level 3 inputs used to value the contingent consideration.
Financial liabilities measured at fair value on a recurring basis are as follows:
Successor
December 31, 2020
Balance Sheet
Location
Level 1 Level 2 Level 3 Total
Liabilities:
Private warrants Warrant liabilities $ —  $ —  $ —  $ — 
Contingent consideration
Notes payable to sellers —  —  1,257  1,257 
  Successor
  September 30, 2021
  Balance Sheet
Location
Level 1 Level 2 Level 3 Total
Liabilities:
Private warrants Warrant liabilities $ —  $ —  $ 18,789  $ 18,789 
Contingent consideration
Notes payable to sellers —  —  888  888 
The changes in the Level 3 fair values of private warrants and contingent consideration are as follows:
  Level 3
Private warrants:
December 31, 2020 $ — 
Additions
21,727 
Changes in fair value
(2,938)
Settlements
— 
September 30, 2021 $ 18,789 
Level 3
Contingent consideration:
December 31, 2020 $ 1,257 
Additions
338 
Changes in fair value
10,891 
Settlements
(11,598)
September 30, 2021 $ 888