Company: LGN
Filing Date: 2025-02-14
Form Type: DRS
Source: 0000950123-25-002471
Chunk: 266

Company: Legence Corp.
Filing Date: 2025-02-14
Form: DRS
Chunk 266
---
 |     | $                 |      — |     | $       |  1,182 |     | $       |      — |
| Contingent consideration liabilities, current                 |     | $                 |      — |     | $       |      — |     | $       | 32,501 |
| Contingent consideration liabilities, current—related parties |     | $                 |      — |     | $       |      — |     | $       | 33,199 |

The carrying value of Cash approximates fair value due to its short-term nature. Interest Rate Swap Instruments:Additional information regarding the accounting policies and relevant derivative instrument disclosure information for the Company’s interest rate swaps can be found in “ Note 2—Summary of Significant Accounting Policies” and “ Note 10—Derivatives.” For determining the fair value of the interest rate swap contracts, the Company uses significant observable market data or assumptions (Level 2 inputs) that market participants would use in pricing similar assets or liabilities, including assumptions about counterparty risk. The fair value estimates reflect an income approach based on the terms of the interest 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.” For certain acquisitions, 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, which are used to determine the resulting value. A probability weighted discounted cash flow method is used to convert the projected earnings to a 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 year ended December 31, 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 Sheet.