Company: IR
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0001628280-25-006391
Chunk: 130

Company: Ingersoll Rand Inc.
Filing Date: 2025-02-19
Form: 10-K
Item: Item 8
Chunk 130
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621.0 million, using a discounted cash flow model. The determination of the acquisition date fair value of the customer relationship intangible assets required the Company to make significant estimates and assumptions regarding estimated future revenues, estimated future earnings before interest, taxes, depreciation and amortization (“estimated future EBITDA”), customer attrition rate, and discount rate.

We identified the fair value of certain acquired customer relationships as a critical audit matter because of the significant judgments made by management to estimate the respective fair value. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to estimated future revenues, estimated future EBITDA, customer attrition rate, and discount rate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included the following, among others:

•We tested the effectiveness of controls over the Company’s determination of the fair values of acquired customer relationships including those over the estimation of future revenues and EBITDA, and the selection of attrition and discount rates.

•We evaluated management’s ability to accurately estimate certain future revenues and EBITDA by comparing actual results to management’s historical forecasts. 

•We evaluated the reasonableness of management’s estimated future revenues and estimated future EBITDA by:

◦Comparing the estimates to historical results;

◦Corroborating assumptions and estimates with internal communications to management and the Board of Directors;

◦Comparing the estimates to information included in Company press releases, as well as analyst and industry reports for the Company and selected companies in its peer group; and

◦Testing the accuracy and completeness of underlying customer attrition data used by management.

•We involved valuation professionals with specialized skills and knowledge who assisted in:

◦Evaluating the discount rate, including testing the underlying market-based source information and the mathematical accuracy of the calculations, and developing a range of independent valuation assumptions and comparing those to the discount rate selected by management.

◦Evaluating the estimated customer attrition rate, including testing the mathematical accuracy of the calculations, comparing the selected attrition rate against relevant historical customer attrition data, and developing a range of attrition rates and comparing those to the attrition rate selected by management.

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/s/ DELOITTE & TOUCHE LLP

Charlotte, NC

February 19, 2025

We have served as the Company’s auditor since 2013.

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