What valuation techniques might The Standardx use for Level Three fair values?

According to The Standardx's 2025 Franchise Disclosure Document, Level Three fair values are based on inputs that cannot be corroborated by observable market data and involve significant management judgment. To determine these values, The Standardx may employ valuation techniques such as discounted future cash flow models, some of which use probability weighting, and other similar internally developed techniques.

When determining fair value, The Standardx may use internally-developed discounted future cash flow models, models from third-party valuation specialists (which may include income-based and/or market-based approaches), third-party appraisals, or broker valuations, and pending third-party offers, if appropriate. For indefinite-lived intangible assets, The Standardx uses the relief from royalty method to estimate fair value.

For acquisitions, independent third-party valuation specialists estimate the fair value of acquired assets or businesses using recognized valuation methods. These methods include the income approach, cost approach, relief from royalty approach, and sales comparison approach, all primarily based on Level Three assumptions. These assumptions include historical financial results, projected cash flows, discount rates, capitalization rates, royalty rates, current market conditions, the likelihood of contract renewals, and comparable transactions. For guarantees, The Standardx generally uses either scenario-based weighting, which utilizes a Monte Carlo simulation, or a probability-based weighting approach, or the with and without method under the income approach.