Company: LGN
Filing Date: 2025-09-02
Form Type: S-1/A
Source: 0001193125-25-193346
Chunk: 158

Company: Legence Corp.
Filing Date: 2025-09-02
Form: S-1/A
Chunk 158
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 the Notes to Condensed Consolidated Financial Statements for further
information, including the identification and measurement of deferred tax assets and liabilities, the measurement of valuation allowances on deferred tax assets, gross unrecognized tax benefits and other additional acquired tax attributes.

Acquisitions and Valuation of Intangible Assets

We assign purchase consideration to the assets acquired and liabilities assumed as of their acquisition dates based on their fair value. We
record our acquisitions under the acquisition method of accounting, and the total purchase price is 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.

115

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