Fair Value Measurement
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurement
16. Fair Value Measurement
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:
 
  •  
Level 1 – observable inputs such as quoted prices in active markets for identical assets and liabilities;
 
  •  
Level 2 – inputs other than quoted prices for identical assets in active markets that are observable either directly or indirectly; and
 
  •  
Level 3 – unobservable inputs in which there is little or no market data which requires the use of valuation techniques and the development of assumptions.
The Company’s financial assets and liabilities measured at fair value on a recurring basis are as follows (in millions):
 
    
December 31, 2022
  
    
Level 1
     
Level 2
     
Level 3
     
Total
  
Assets
                                    
Interest rate swaps
    $ —        $ 134      $ —        $ 134  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total assets recorded at fair value
    $ —        $ 134      $ —        $ 134  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Contingent consideration liability
      —          —          13        13  
Seller Earnouts liability
      —          —          96        96  
Tax receivable agreement liability
      —          —          575        575  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total liabilities recorded at fair value
    $ —        $ —        $ 684      $ 684  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
 
    
December 31, 2021
  
    
    Level 1    
     
    Level 2    
     
    Level 3    
     
    Total    
  
Assets
                                    
Interest rate swaps
    $ —        $ 17      $ —        $ 17  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total assets recorded at fair value
    $ —        $ 17      $ —        $ 17  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Interest rate swaps
    $ —        $ 9      $ —        $ 9  
Contingent consideration liability
      —          —          33        33  
Seller Earnouts liability
      —          —          135        135  
Tax receivable agreement liability
      —          —          581        581  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total liabilities recorded at fair value
    $ —        $ 9      $ 749      $ 758  
    
 
 
     
 
 
     
 
 
     
 
 
  
Derivatives
The valuations of the derivatives intended to mitigate our interest rate risk are determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves, interest rate volatility, or spot and forward exchange rates, and reflects the contractual terms of these instruments, including the period to maturity. In addition, credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, are incorporated in the fair values to account for potential
non-performance
risk.
Contingent Consideration
The contingent consideration liabilities relate to acquisitions completed during the Successor six months ended December 31, 2021, the Predecessor years ended December 31, 2020 and 2018, and are included in Other current liabilities and Other liabilities on the Consolidated Balance Sheets. The fair value of these liabilities is determined using a discounted cash flow analysis. Changes in the fair value of the liabilities are included in Other (income) expense, net in the Consolidated Statements of Comprehensive Income (Loss). Significant unobservable inputs are used in the assessment of fair value, including assumptions regarding discount rates and probability assessments based on the likelihood of reaching the various targets set out in the acquisition agreements.
The following table summarizes the changes in deferred contingent consideration liabilities (in millions):
 
 
  
Successor
 
 
 
 
 
Predecessor
 
 
  
Year Ended
December 31,
2022
 
  
Six Months
Ended
December 31,
2021
 
 
 
 
 
Six Months
Ended
June 30,
2021
 
  
Year Ended
December 31,
2020
 
Beginning balance
    $ 33      $ 29        
 
   $ 26      $ 22  
Acquisitions
      —          8        
 
     2        3  
Measurement period adjustments
      (2 )       —          
 
     —             
Accretion of contingent consideration
      1        —          
 
     1        —    
Remeasurement of acquisition-related contingent consideration
      (15 )       (2 )       
 
     —          8  
Payments
      (4 )       (2 )       
 
     —          (7 ) 
    
 
 
     
 
 
            
 
 
     
 
 
  
Ending Balance
    $ 13      $ 33             $ 29      $ 26  
    
 
 
     
 
 
            
 
 
     
 
 
  
Non-Recurring
Fair Value Measurements
The Company’s financial liabilities measured at fair value on a
non-recurring
basis are as follows (in millions):
 
 
  
December 31, 2022
 
  
December 31, 2021
 
 
  
Carrying Value
 
  
Fair Value
 
  
Carrying Value
 
  
Fair Value
 
Liabilities
  
  
  
  
Current portion of long-term debt, net
    $ 31      $ 31      $ 38      $ 38  
Long-term debt, net
      2,792        2,780        2,830        2,834  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 2,823      $ 2,811      $ 2,868      $ 2,872  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
 
The carrying value of the Term Loan, Secured Senior Notes and Unsecured Senior Notes include the outstanding principal balances, less any unamortized discount or premium. The carrying value of the Term Loan approximates fair value as it bears interest at variable rates, and we believe our credit risk is consistent with when the debt originated. The outstanding balances under the Senior Notes have fixed interest rates and the fair value is classified as Level 2 within the fair value hierarchy and corroborated by observable market data (see Note 8 “Debt”).
The carrying amounts of Cash and cash equivalents, Receivables, net and Accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments.
During the Successor year ended December 31, 2022, the six months ended December 31, 2021, the Predecessor six months ended June 30, 2021 and year ended December 31, 2020, there were no transfers in or out of t
he
Level 1, Level 2 or Level 3 classifications.