Legence Corp.LGN

Legence Corp. Goodwill & Intangibles Disclosure

10-KFiled Mar 30, 20263 min read
Goodwill and Intangible Assets
The following is a summary of changes in the carrying value of Goodwill by segment (in thousands):
Carrying value of GoodwillEngineering & ConsultingInstallation & MaintenanceTotal
Balance, December 31, 2023$327,950 $348,084 $676,034 
Acquisitions124,784 — 124,784 
Measurement period adjustments(1,853)33 (1,820)
Impairment(17,804)— (17,804)
Balance, December 31, 2024433,077 348,117 781,194 
Acquisitions3,139 3,232 6,371 
Measurement period adjustments1,737 — 1,737 
Impairment(24,966)— (24,966)
Balance, December 31, 2025$412,987 $351,349 $764,336 
Accumulated goodwill impairment
Balance, December 31, 2023$5,051 $47,407 $52,458 
Balance, December 31, 2024$22,855 $47,407 $70,262 
Balance, December 31, 2025$47,821 $47,407 $95,228 

During the annual impairment testing conducted on October 1, 2025, 2024 and 2023, the Company bypassed the qualitative assessment and proceeded directly to the quantitative assessment. The Company performed its annual goodwill impairment assessment for all reporting units and determined that the estimated fair value of each reporting unit exceeded its carrying amount. Subsequent to the annual goodwill impairment assessment, it was determined the carrying amount of Goodwill for one reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment of $25.0 million. The impairment was primarily driven by a decline in projected cash flows due to lower customer demand, extending sales cycles and project funding uncertainty in the alternative energy industry.
During the year ended December 31, 2024, it was determined the carrying amount of Goodwill for the same reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment of $17.8 million. The impairment was primarily driven by a decline in projected cash flows due to lower revenue projections. Lower revenue projections primarily reflected the impact of delayed contract awards and the uncertainty that revenue will be realized for these contracts which are point-in-time revenue recognition contracts.
During the year ended December 31, 2023, it was determined the carrying amount of Goodwill for a different reporting unit in the Engineering & Consulting segment exceeded fair value, resulting in Goodwill impairment 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.
Impairment charges are presented in Goodwill impairment on the Consolidated Statements of Operations.
The Company’s identifiable intangible assets consist of the following (in thousands, except weighted-average remaining lives):
December 31, 2025
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted-average Remaining Life
(in years)
Customer relationships$658,798 $(209,054)$449,744 8.3
Trade names180,428 (80,068)100,360 5.4
Contract backlog1,570 (254)1,316 1.4
$840,796 $(289,376)$551,420 
December 31, 2024
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted-average Remaining Life
(in years)
Customer relationships$652,315 $(153,262)$499,053 9.3
Trade names178,970 (61,137)117,833 6.4
Contract backlog18,745 (11,381)7,364 0.6
$850,030 $(225,780)$624,250 
The value of acquired identifiable intangibles at the applicable acquisition dates in 2025 and 2024 are $11.8 million and $87.1 million, respectively. Refer to “Note 4—Acquisitions” for further information.
Future amortization of intangible assets as of December 31, 2025 was as follows (in thousands):
Year ending December 31:
2026$78,407 
202774,063 
202873,763 
202973,737 
203072,475 
Thereafter178,975 
$551,420 

About Goodwill & Intangibles Disclosures

Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.

Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.

Other Available Disclosures

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