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409A Valuation Service.

Bundle your “independent” 409A valuation with your annual software license to simplify your financial requirements.

What is a 409A Valuation?

A 409A valuation is an appraisal of the fair market value of a private company’s common stock. This valuation is performed in accordance with Section 409A of the U.S. Internal Revenue Code. A 409A valuation is crucial for private companies that grant stock options as it helps determine the exercise price of those options. If there are discrepancies in the valuation or errors in financial records, it could trigger adverse tax consequences for both the company and the option recipients under Section 409A.

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Your 409A Valuation Questions, Answered

What Triggers a 409A Valuation?

A 409A valuation is typically triggered by specific events or circumstances in a private company, particularly when it plans to grant equity-based compensation to its employees, directors, or other service providers. Some common triggers for a 409A valuation include granting stock options, annual audits, new funding rounds, mergers, acquisitions, changes in tax law, or preparing for an IPO.

Can I Do My Own 409A Valuation?

Technically, a company can perform its own 409A valuation; however, it is generally not recommended. According to Section 409A of the U.S. Internal Revenue Code, the valuation must be performed by a “qualified appraiser” who possesses the relevant experience and knowledge to accurately determine the fair market value of the company’s common stock. Performing an in-house 409A valuation may raise concerns about the independence and objectivity of the valuation, potentially leading to increased scrutiny by the IRS or other regulatory authorities.

How Do You Conduct a 409A Valuation?

Conducting a 409A valuation involves several steps to determine the fair market value of a private company’s common stock in compliance with Section 409A of the U.S. Internal Revenue Code. Typically, a qualified appraiser or an independent third-party valuation firm performs the valuation using accepted valuation methods.

What Is the Difference Between 409A and Post-Money Value?

409A valuation and post-money value are two different concepts used in the context of private companies, particularly startups. A 409A is the appraised value of a private company’s common stock. A post-money valuation is the estimated value of a company after a major investment or financing round, used to determine ownership percentages for investors.

How Astrella Helps

Astrella connects our clients with high-quality and objective valuation providers at discounted prices. We select independent and highly qualified providers who can work with you and your company, with an approach appropriate for your company’s stage and size to provide the most accurate report at discount prices.

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