Marcus & Millichap, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements (Tables)

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Assets and liabilities at Fair Value on Recurring Basis

Assets and liabilities carried at fair value on a recurring basis consisted of the following (in thousands):


	December 31, 2019								December 31, 2018
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets:
Assets held in rabbi trust	$	9,452	$	—	$	9,452	$	—	$	8,268	$	—	$	8,268	$	—

Cash equivalents (1) :
Commercial paper and other	$	5,087	$	—	$	5,087	$	—	$	1,599	$	1,599	$	—	$	—
Money market funds		185,513		185,513		—		—		163,126		163,126		—		—

	$	190,600	$	185,513	$	5,087	$	—	$	164,725	$	164,725	$	—	$	—

Marketable securities, available-for-sale:
Short-term investments:
U.S. treasuries	$	124,580	$	124,580	$	—	$	—	$	121,180	$	121,180	$	—	$	—
U.S. government sponsored entities		—		—		—		—		3,505		—		3,505		—
Corporate debt		26,172		—		26,172		—		11,951		—		11,951		—
ABS and other		—		—		—		—		800		—		800		—

	$	150,752	$	124,580	$	26,172	$	—	$	137,436	$	121,180	$	16,256	$	—

Long-term investments:
U.S. treasuries	$	24,423	$	24,423	$	—	$	—	$	45,010	$	45,010	$	—	$	—
U.S. government sponsored entities		1,355		—		1,355		—		1,507		—		1,507		—
Corporate debt		26,471		—		26,471		—		31,837		—		31,837		—
ABS and other		8,560		—		8,560		—		4,855		—		4,855		—

	$	60,809	$	24,423	$	36,386	$	—	$	83,209	$	45,010	$	38,199	$	—

Liabilities:
Contingent consideration	$	4,788	$	—	$	—	$	4,788	$	2,875	$	—	$	—	$	2,875

Deferred compensation liability	$	8,241	$	8,241	$	—	$	—	$	7,893	$	7,893	$	—	$	—

(1)	Included in cash and cash equivalents on the accompanying consolidated balance sheets.

Schedule of Reconciliation of Contingent Consideration Measured at Fair Value on Recurring Basis

Assuming the achievement of the applicable performance criteria and/or service and time requirements, the Company anticipates these

earn-out

payments will be made over the next one to seven-year period. Changes in fair value are included in selling, general and administrative expense

in the consolidated statements of net and comprehensive income. A reconciliation of contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands):


	December 31,
	2019			2018
Beginning balance	$	2,875		$	—
Contingent consideration in connection with acquisitions (1)		2,382			2,674
Change in fair value of contingent consideration		202			201
Payments of contingent consideration		(671	)		—

Ending balance	$	4,788		$	2,875

(1)	Contingent consideration in connections with acquisitions represents noncash investing activity.

Fair Value Liabilities Measured On Recurring Basis Valuation Techniques

Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial liabilities measured at fair value on a recurring basis consisted of the following (dollars in thousands):

Fair Value at

December 31, 2019

Valuation Technique

Unobservable inputs

Range (Weighted

Average)

(1)

Contingent consideration

4,788

Discounted cash flow

Expected life of cash flows

0.4-5.8

years (2.3 years)

Discount rate

3.6%-5.0%

(4.1%)

Probability of achievement

33.0%-100.0%

(81.8%)

(1)	Unobservable inputs were weighted by the relative fair value of the instruments.

Fair Value Liabilities Measured On NonRecurring Basis Valuation Techniques

Quantitative information about the valuation technique and significant unobservable inputs used in the valuation of the Company’s Level 3 financial assets measured at fair value on a nonrecurring basis consisted of the following (dollars in thousands):

Fair Value at

December 31, 2019

Valuation Technique

Unobservable inputs

Range (Weighted

Average)

(1)

MSRs

2,204

Discounted cash flow

Constant prepayment rates

0.0%-20.0%

(10.0%)

Constant default rate

2.0%-2.0%

(2.0%)

Loss severity

40.0%-40.0%

(40.0%)

Discount rate

9.5%-9.7%

(9.7%)

(1)	Weighted average is based on the 10% constant prepayment rate scenario which the Company uses as the reported fair value.