Company: LGN
Filing Date: 2025-11-03
Form Type: DRS
Source: 0001193125-25-262782
Chunk: 255

Company: Legence Corp.
Filing Date: 2025-11-03
Form: DRS
Chunk 255
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 its reporting units are its operating companies, which constitute
businesses. The Company has an option of performing a qualitative assessment of impairment to determine whether any further quantitative testing for impairment is necessary. If the Company determines, based on qualitative factors, that it is more
likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative assessment is performed to compare the fair value of the reporting unit to its carrying value. Further, the Company may choose to bypass the
qualitative assessment and proceed directly to the quantitative assessment. An impairment loss is recognized for a reporting unit to the extent fair value is less than the carrying value, limited to the amount of goodwill allocated to that reporting
unit.

Fair values of reporting units are estimated based on a market approach and an income approach. The income approach utilizes
discounted future cash flows and assumptions critical to the fair value estimate of the discounted cash flow model including the revenue growth rate, forecasted margins, and discount rate. The market approach utilizes market multiples of invested
capital from comparable publicly traded companies. The market multiples from invested capital include revenue, book equity plus debt, and earnings before interest, provision for income taxes, depreciation and amortization (“EBITDA”). If
an impairment loss is determined, the loss is recognized in the Consolidated Statements of Operations.

The Company completed its annual
goodwill impairment test as of October 1, 2024. See “” for additional information regarding Goodwill.

Intangible Assets, Net

The
Company’s identifiable intangible assets include customer relationships, trade names, and contract backlog. All finite-lived identifiable intangible assets are subject to amortization on a straight-line basis over their estimated lives. Refer
to “” for additional information regarding intangible assets.

Long-Lived Assets Impairment

Long-lived assets, which include property and equipment, operating lease right-of-use assets, and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be
recoverable. Recoverability generally is determined by comparing the carrying value of an asset group to the expected undiscounted future cash flows of the asset group. If the carrying value of an asset group exceeds its expected undiscounted future
cash flows (i.e., not recoverable), the amount of impairment loss is measured as the difference between the carrying value of the asset group and its estimated fair value generally using the expected discounted future cash flows. During the fourth
quarter of