Company: LGN
Filing Date: 2025-07-15
Form Type: DRS/A
Source: 0000950123-25-006399
Chunk: 276

Company: Legence Corp.
Filing Date: 2025-07-15
Form: DRS/A
Chunk 276
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-classified due to a below fair value repurchase feature that is exercisable by the Parent under certain employment termination scenarios. The Company recognizes compensation expense on a straight-line basis over the five-year
vesting period with accelerated vesting and compensation expense when or if a change of control, as defined in Parent agreement (“Change of Control”), event occurs. The liability is adjusted for changes in fair value at each reporting
date. The liability is reclassified to equity when or if the awards are no longer subject to the below fair value repurchase feature.

The Company
accounts for the Performance Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if certain liquidity events (including Change of Control) that trigger vesting occur. The Company also accounts for the Exit
Interests as equity-classified awards under ASC 718 and recognizes compensation expense when or if a Change of Control that triggers vesting occurs. Awards forfeitures are accounted for as they occur.

The Company utilizes the option-pricing method (“OPM”) and the hybrid method to determine the fair value of stock-based payment awards using certain
assumptions. The expected life assumption represents the period of time the Parent interests are expected to be outstanding while the risk-free rate is based on the U.S. Treasury yield for a term consistent with the expected life. The expected
volatility assumption is based on the volatility of guideline public companies, adjusted for the Company’s size and leverage. Since the Parent interests do not have a provision for recurring distributions and the Parent does not have a history
or expectation of future recurring distributions, the Company’s expected dividend yield assumption is nil. The hybrid method incorporates various future outcomes, including IPO scenarios and a delayed exit scenario, and allocates the value in
each scenario using the OPM.

Once vested, the holders of the Series A Profits Interests may participate in distributions of the Company’s earnings,
assets and properties upon liquidation or a distribution as directed by the Parent’s board of directors. The distributions are first made to the holders of Common Interests until their unreturned contributions are

F-23

Confidential Treatment Requested by Legence Corp.

Pursuant to 17 C.F.R. Section 200.83

Legence Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

reduced to zero, and thereafter to the holders of vested Series A Profits Interests and Common Interests pro rata based on their aggregate percentage interests (taking into account any applicable
participation thresholds