Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2025

Summary of Assets and Liabilities Carried at Fair Value Measured on Recurring Basis

The following table presents, by level within the fair value hierarchy, the Company's financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2025, according to the valuation technique utilized to determine their fair values. There were no assets or liabilities measured on a recurring basis as of December 31, 2024 or December 31, 2023.


	Fair Value Measurements at December 31, 2025
(in thousands)	Carrying Value		Level 1		Level 2		Level 3
Assets:
Receivable due from unconsolidated affiliate	$	97,000	$	—	$	—	$	97,000
Equity investment in Lugano	—		—		—		—
Total recorded at fair value	$	97,000	$	—	$	—	$	97,000

The Company had no assets or liabilities Level 3 fair value measurements during the years ended December 31, 2024. A reconciliation of the change in the carrying value of the Company's Level 3 fair value measurement during the year ended December 31, 2025 is as follows:


	Year ended December 31,
	2025
Balance at January 1st	$	—
Receivable due from unconsolidated affiliate	97,000
Equity investment - Lugano	—
Balance at December 31st	$	97,000

Valuation Techniques

Receivable Due from Unconsolidated Affiliate (Secured Claim Against Lugano)

The receivable due from an unconsolidated affiliate represents the Company’s estimate of the fair value of its secured claim related to intercompany loans to Lugano, which is currently subject to bankruptcy proceedings. The fair value measurement is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs.

Fair value was determined using a valuation approach that reflects management’s current expectations regarding recoveries from the bankruptcy proceedings. The estimate considers factors such as the priority and amount of secured and unsecured creditor claims and the expected timing of potential distributions. The valuation incorporates assumptions that are not directly observable in the marketplace and therefore require judgment, including estimates of recoverable amounts and the resolution of claims through the bankruptcy process. These assumptions reflect information available to management as of the measurement dates. Changes in these assumptions could affect the estimated fair value.

Equity Investment in Lugano

The Company’s equity investment in Lugano is measured at fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs. As of the measurement date, which coincided with Lugano’s bankruptcy filing, and as of December 31, 2025, the fair value of the Company’s equity investment was estimated to be $0.

Fair value was determined using estimates of projected cash flows that reflect management’s estimates of expected recoveries from the bankruptcy proceedings. Significant assumptions include projected cash flows available to equity holders, the priority and magnitude of secured and unsecured creditor claims, and the timing of any potential distributions. These inputs are not observable in the marketplace and require significant judgment.

Based on the estimated claims of secured and unsecured creditors, which significantly exceed expected recovery proceeds, no residual value was attributable to the Company’s equity interest as of the measurement dates.

Summary of Assets and Liabilities Carried at Fair Value Measured on Non-recurring Basis

The following table provides the assets and liabilities carried at fair value measured on a non-recurring basis as of December 31, 2025, December 31, 2024 and December 31, 2023. Refer to "Note H – Goodwill and Intangible Assets", for a description of the valuation techniques used to determine fair value of the assets measured on a non-recurring basis in the tables below.


							Expense
	Fair Value Measurements at December 31, 2025						Year ended
(in thousands)	Carrying Value (1)		Level 1	Level 2	Level 3		December 31, 2025
Property, plant and equipment - Lugano	$	—	—	—	$	—	$	29,631
Right-of-use asset - Lugano	$	—	—	—	$	—	$	1,884

Compass Diversified Holdings 10-K