Company: LGN
Filing Date: 2025-08-15
Form Type: S-1
Source: 0001193125-25-181698
Chunk: 157

Company: Legence Corp.
Filing Date: 2025-08-15
Form: S-1
Chunk 157
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 allocated to the acquired net tangible and identifiable intangible assets based on their fair values as of the acquisition dates. Determining the
fair value of certain long-lived assets, specifically intangible assets, requires judgment and often involves the use of significant estimates and assumptions.

The estimated fair value of identified intangible assets are Level 3 fair value measurements and are determined using discounted cash
flow techniques. Fair value is estimated using a multi-period excess earnings method for customer relationships and backlog and a relief from royalty method for trade names. The significant assumptions used in estimating fair value of customer
relationships and backlog include (i) the estimated life the asset will contribute to cash flows, such as remaining contractual terms, (ii) revenue growth rates and EBITDA margins, (iii) attrition rate of customers, and (iv) the
estimated discount rates that reflect the level of risk associated with receiving future cash flows. The significant assumptions used in estimating fair value of trade names include discount rates and estimated royalties that would be paid to
license a comparable asset. The royalty rates used in this method are based on published comparable market royalty transactions.

Refer to
“Note 2—Summary of Significant Accounting Policies” and “Note 4—Acquisitions” in the Notes to Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements for further information on
valuation methods, inputs and assumptions.

Recent Accounting Pronouncements

See “Note 2—Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements and Notes to
Condensed Consolidated Financial Statements included elsewhere in this prospectus for more information regarding recent accounting pronouncements.

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Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, we are exposed to financial risks such as changes in interest rates and inflation risk associated with our
input costs. We utilize derivative instruments, classified as cash flow hedges, to manage interest rate exposures on our floating rate debt.

Interest Rate Risk

Our exposure
to market risk for changes in interest rates relates primarily to our long-term debt. The interest expense associated with our long-term debt will vary with market rates. We seek to mitigate this risk with an appropriate amount of fixed rate debt
obligations through interest rate derivative contracts that fix the interest rate on the respective floating rate debt obligations. Without taking into consideration the effect of our interest rate swap agreements, based upon our outstanding
principal amount of floating rate debt of $1,590.4 million as of December 31, 2024 and $1,