Company: CODI-PB
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001345126-25-000015
Chunk: 268

Company: Compass Diversified Holdings
Filing Date: 2025-02-27
Form: 10-K
Item: Item 16
Chunk 268
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2022. The purchase price of King's Camo included a potential earn-out if King's Camo achieved certain financial metrics. The payment of the earn-out occurred in April 2023.Valuation TechniquesOptions of noncontrolling shareholdersThe put option of noncontrolling shareholders was determined based on inputs that were not readily available in public markets or able to be derived from information available in publicly quoted markets. As such, the Company categorized the put option of the noncontrolling shareholders as Level 3. The primary inputs associated with this valuation were earnings before interest, taxes amortization and depreciation times a multiple established in the shareholder put option agreement, which was used to determine a per share equity value for the shares that could be put back to the Company. The put option was terminated during the period ended March 31, 2023.Contingent ConsiderationFor certain acquisition of businesses that the Company or its subsidiaries make, a portion of the acquisition price will be contingent consideration. The following is a summary of the contingent consideration arrangements entered into by the Company's subsidiaries in the prior three years and the valuation methodologies: •Velocity entered into a contingent consideration arrangement in connection with their purchase of King's Camo in July 2022. The purchase price of King's Camo included a potential earn-out of $3.0 million if King's Camo achieved certain financial metrics. The contingent consideration was valued at $1.6 million using probability weighted models. The earnout was reduced to $1.3 million at December 31, 2022 based on the expected payout amount. The payment of the earn-out occurred in April 2023.Senior NotesThe Company's Senior Notes consisted of the following carrying value and estimated fair value (in thousands):Fair Value Hierarchy LevelDecember 31, 2024Maturity DateRateCarrying ValueFair Value2032 Senior NotesJanuary 15, 20325.000 %2$300,000 $272,250 2029 Senior NotesApril 15, 20295.250 %2$1,000,000 $952,500 2022 Term LoanAt December 31, 2024, the carrying value of the principal under the Company's outstanding 2022 Term Loan, including the current portion, was $375 million, which approximates fair value because it bears interest at a variable 

F-49

COMPASS DIVERSIFIED HOLDINGSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

interest rate that reflects changes