Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 314

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 314
---
 rate swap contracts and inputs corroborated by observable market data, including interest rate curves. Contingent Consideration Liabilities:Contingent consideration liabilities are related to business acquisitions with earnout provisions included in the respective purchase agreement, as further described in “ Note 4 —Acquisitions,” pursuant to which a payment may be made at a specified future date based on the performance of the acquired business subsequent to the acquisition. The Company’s contingent consideration liabilities are measured at fair value using Level 3 unobservable inputs. The Level 3 inputs include internally developed assumptions of the probabilities of achieving the specified earnout target. A probability weighted discounted cash flow method is used to convert the projected earnings to a F-46

Legence Holdings LLC and Subsidiaries Notes to Consolidated Financial Statements present fair value, including inputs such as projected earnings from the acquired business, the likelihood of such outcomes, and specific contractual terms governing the individual earnout. During the years ended December 31, 2024 and 2023, there were no significant changes in the valuation techniques or inputs related to the Company’s contingent consideration liabilities. As of December 31, 2023, all the earnout periods were complete and the calculation of the earnout obligation was final. The remaining amount to be paid for contingent consideration liabilities as of December 31, 2023 was $65.7 million, which is included in Accrued and other current liabilities on the Consolidated Balance Sheets. Changes in the fair value of contingent consideration liabilities are recorded to Changes in the fair value of contingent consideration liabilities on the Company’s Consolidated Statements of Operations. The following is a Level 3 summary of changes in contingent consideration liabilities (in thousands):

|                                                      |     |   |    2024 |   |     |   |    2023 |   |
|:-----------------------------------------------------|:----|:--|--------:|:--|:----|:--|--------:|:--|
| Balance, beginning of period                         |     | $ |  65,700 |   |     | $ |  41,425 |   |
| Initial fair value for current year acquisitions     |     |   |       — |   |     |   |  13,929 |   |
| Change in fair value included in earnings            |     |   |       — |   |     |   |  31,071 |   |
| Payment of contingent consideration—cash             |     |   | (65,700 |