Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2025

5. Fair Value of Financial Instruments

The Company measures fair value based on the prices 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. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as observable inputs, such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table sets forth the Company’s financial assets and liabilities measured on a recurring basis at fair value, categorized by input level within the fair value hierarchy.


	September 30, 2025
(in thousands)	Fair Value		Level 1		Level 2		Level 3
Liabilities measured at fair value
Derivative financial instruments	$	670	$	—	$	670	$	—
Total liabilities measured at fair value	$	670	$	—	$	670	$	—


	December 31, 2024
(in thousands)	Fair Value		Level 1		Level 2		Level 3
Assets measured at fair value
Derivative financial instruments	$	796	$	—	$	796	$	—
Total assets measured at fair value	$	796	$	—	$	796	$	—

Interest Rate Cap Agreements

The Company has interest rate collar contracts with an aggregate notional value of principal of $700.0 million as of September 30, 2025, from various financial institutions to manage the Company’s exposure to interest rate movements on variable rate credit facilities. The interest rate collar contracts will mature on April 5, 2026, 2027 and 2028.

As of September 30, 2025, the fair value of the Company’s outstanding interest collars of $0.7 million was included in “Other long-term liabilities” in the Condensed Consolidated Balance Sheets. As of December 31, 2024 the fair value of the Company’s outstanding interest rate caps and collars of $0.8 million was included in “Other assets” in the Condensed Consolidated Balance Sheets. Changes in fair value of the Company's outstanding interest rate caps and collars are recognized as a component of “Interest expense, net” in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the three months ended September 30, 2025 and 2024, the Company recorded a gain of $0.5 million and a loss of $3.7 million, respectively, within “Interest expense, net,” related to changes in the fair value of its derivative instruments. During the nine months ended September 30, 2025 and 2024, the Company recorded a loss of $1.5 million and a gain of $1.7 million, respectively, within “Interest expense, net”, related to changes in the fair value of its derivative instruments.

Long-term Debt

The following tables set forth the carrying values and fair values of the Company’s financial liabilities measured on a recurring basis, categorized by input level within the fair value hierarchy:


(in thousands)	Carrying Value		Fair Value (Level 2)
Balance at September 30, 2025
Term Loan Facility	$	1,096,058	$	1,121,094
Notes		595,087		606,363
Total long-term debt	$	1,691,145	$	1,727,457


(in thousands)	Carrying Value		Fair Value (Level 2)
Balance at December 31, 2024
Term Loan Facility	$	1,105,995	$	1,153,346
Notes		615,087		612,533
Total long-term debt	$	1,721,082	$	1,765,879

- Definition

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.

+ References

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+ Details

Advantage Solutions Inc. 10-Q