409A Valuation

At Acumen Sphere, we specialize in delivering comprehensive, audit-ready 409A valuation reports tailored for private companies. Our IRS Section 409A valuations are crucial for accurately determining the Fair Market Value (FMV) of your company’s common stock, ensuring your equity compensation complies with IRS regulations.

A 409A valuation provides an independent assessment of your company’s FMV, essential for avoiding potential tax penalties for both your company and your employees. By ensuring compliance with IRS regulations, our valuations protect you from costly repercussions and offer peace of mind when issuing stock options and other equity incentives.

Our team of seasoned professionals conducts detailed analyses of your business’s financial history, projections, and comparable transactions to deliver precise valuations that withstand scrutiny. With over 1500 successful engagements, we focus on delivering valuations that not only meet compliance requirements but also serve as reliable documentation for audits.

Trust Acumen Sphere to provide you with an audit-ready 409A valuation report that safeguards your interests and ensures adherence to IRS guidelines, allowing you to confidently offer equity compensation to your employees.

Frequently Asked Questions

A 409A valuation is an independent appraisal of the fair market value (FMV) of a private company's common stock, required for issuing stock options to employees and ensuring compliance with IRS regulations.

It determines the exercise price for stock options, ensuring they are granted at fair market value, which helps in avoiding penalties from the IRS.

A 409A valuation is required whenever stock options are issued to the employees, consultants, or other service providers. The valuation is also required when there are significant changes in the company's financials or market conditions.

A 409A valuation should be updated annually or whenever there is a material event, such as a new round of funding, acquisition, or significant change in the company's operations.

Common methodologies used in a 409A Valuation include the Income Approach (Discounted Cash Flow), Market Approach (Comparable Companies), and Asset Approach (Cost-to-Recreate).

The process typically takes 5-10 business days, depending upon the complexity of the valuation, after submitting all necessary information and documentation.

Minimum information required for a 409 A Valuation include company details, financial statements, fundraising information, and the desired valuation date. There could be additional information requirement which may be furnished based on discussions.

The 409A valuation is specifically for stock option issuance and IRS compliance. It is not intended for other purposes like mergers or acquisitions.

Although the 409A valuation can be performed in-house, the onus to prove that the stock options are not undervalued lies on the Company.

However, an assessment by an independent AICPA-certified appraiser would transfer the onus of proof on the IRS.

Further, the risks of non-compliance are higher, which is not worth the management’s time and effort.

An incorrect valuation can lead to penalties from the IRS. It is crucial to ensure the valuation is accurate and up-to-date.

To initiate the process, simply contact us through our website, email or call our office. We will guide you through the necessary steps and gather the required information for your valuation.

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