Company: LGN
Filing Date: 2025-12-09
Form Type: S-1
Source: 0001193125-25-312729
Chunk: 313

Company: Legence Corp.
Filing Date: 2025-12-09
Form: S-1
Chunk 313
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 longer subject to the below fair value repurchase feature.

The Company accounts for the Performance Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if
certain liquidity events (including Change of Control) that trigger vesting occur. The Company also accounts for the Exit Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if a Change of Control that
triggers vesting occurs. Awards forfeitures are accounted for as they occur.

The Company utilizes the option-pricing method
(“OPM”) and the hybrid method to determine the fair value of stock-based payment awards using certain assumptions. The expected life assumption represents the

F-61

period of time the Parent interests are expected to be outstanding while the risk-free rate is based on the U.S. Treasury yield for a term consistent with the expected life. The expected
volatility assumption is based on the volatility of guideline public companies, adjusted for the Company’s size and leverage. Since the Parent interests do not have a provision for recurring distributions and the Parent does not have a history
or expectation of future recurring distributions, the Company’s expected dividend yield assumption is nil. The hybrid method incorporates various future outcomes, including IPO scenarios and a delayed exit scenario, and allocates the value in
each scenario using the OPM.

Once vested, the holders of the Series A Profits Interests may participate in distributions of the
Company’s earnings, assets and properties upon liquidation or a distribution as directed by the Parent’s board of directors. The distributions are first made to the holders of Common Interests until their unreturned contributions are
reduced to zero, and thereafter to the holders of vested Series A Profits Interests and Common Interests pro rata based on their aggregate percentage interests (taking into account any applicable participation thresholds). Please refer to
“” for additional information regarding Common Interests.

The Series A Profits
Interests are subject to certain forfeiture and repurchase provisions in the event of interest holder employment termination. Restricted Series C Common Interests participate in distributions alongside Common Interests and are subject to the same
forfeiture and repurchase provisions as the Series A Profits Interests. Holders of Restricted Series C Common Interests must repay any distributions received on unvested Restricted Series C Common Interests within 15 days of employment termination.

Please refer to “” for additional information and further disclosures regarding
stock-based compensation.

Income Taxes

Parent is treated as a partnership for federal and state income tax