Company: LGN
Filing Date: 2025-08-25
Form Type: S-1/A
Source: 0001193125-25-186788
Chunk: 157

Company: Legence Corp.
Filing Date: 2025-08-25
Form: S-1/A
Chunk 157
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 of the discounted cash flow model include the revenue
growth rate, forecasted EBITDA margin 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. Three reporting units with total goodwill balance of $247.2 million had estimated fair values that exceeded values ranging from 11.3% to 13.3%. As of
December 31, 2024, except for these three reporting units and the reporting unit discussed below, all other reporting units had estimated fair values that exceeded their carrying values by at least 24%.

During the year ended December 31, 2024, it was determined the carrying amount of goodwill for one reporting unit in the
Engineering & Consulting segment exceeded fair value, resulting in goodwill impairment charges of $17.8 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections. During the year
ended December 31, 2023, it was determined the carrying amount of goodwill for one reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in goodwill impairment charges of $5.1 million. The
impairment was primarily driven by a decline in projected cash flows due to lower revenue projections and investments in support functions. During the year ended December 31, 2022, it was determined the carrying amount of goodwill for two
reporting units in the Installation & Maintenance segment exceeded fair value, resulting in goodwill impairment charges of $23.4 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue
projections, investments in support functions and increased cost of capital due to rising interest rates.

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There are inherent uncertainties related to these factors and management’s judgment in
applying them to the analysis of goodwill impairment. It is possible that changes in facts, judgments and assumptions made in estimating the fair value of reporting units could occur, resulting in possible impairment in the future.

Income Taxes

We utilize the asset
and liability approach in reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts
in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that is more