Section 409A comes under the US tax law. It holds the rules regarding the stock options that some companies give to their employees.

Obtaining a 409A valuation permits your firm to comply with all tax laws and prevent IRS audits, which may result in legal concerns, tax issues, and even interference with the company's operations if issues come up.

This course covers 409A valuations -- why they’re necessary, how they’re performed, how companies use them, what other corporate events can impact the appraisal, and how frequently companies need to obtain one. 

We begin with an overview of the reasons for obtaining a 409A valuation. We then explain, at a high level, how 409A appraisals are performed:  This explanation covers both the assumptions required and the methodologies used within the reports.  An entire section is devoted to the Black-Scholes Option Pricing Method for allocating equity value to individual securities.  This is followed by a discussion of events that could impact the methodologies used in the report and the opined values. 

Learning Objectives
  • Identify the reasons for obtaining a 409A valuation and the consequences of not obtaining one.
  • Explore the valuation process
  • Identify common misconceptions regarding 409A valuations.
  • Recognize events that could impact the contents and conclusions of 409A valuations.
  • Discover how frequently you need to obtain a 409A valuation.
Last updated/reviewed: January 5, 2023
11 Reviews (54 ratings)

Reviews

4
Anonymous Author
Overall an excellent presentation. Two points for the future. 1) During discussion of the income approach, you mentioned the market approach would be covered next. that did not happen, as the session moved to "How is equity value determined?" 2) Unsure if possible but the "OPM" section was really hard to follow. You noted same, but I observe.

4
Anonymous Author
better if we could tell which questions we got wrong so that we can go back and either listen to the lecture or review the materials provided. Moving on from the course and not knowing which questions we were incorrect about make it difficult to know which sections we mastered.

5
Anonymous Author
This course provided a helpful overview of 409A valuations. I was surprised at the level of detail that was provided for the actual calculations, which was helpful.

5
Member's Profile
Good course covering the basics, slide content is a little sparse but good enough for anyone with a valuation background.

5
Member's Profile
This course was helpful and provided a straight forward approach and understanding to complex topics.

5
Anonymous Author
The information was presented in a manner that was easy to follow and digest. Good Course

3
Member's Profile
didnt deal with a lot of the intricacies of 409A; only valuation for stock options

5
Anonymous Author
Would love to see an example of these in specific sectors such as biotech

3
Anonymous Author
Good overview. It would have helped if an Excel model is provided.

4
Anonymous Author
Would help to break down example calcs step by step

5
Member's Profile
Very informative introductory course.

Prerequisites
Course Complexity: Intermediate

No advanced preparation or prerequisites are required for this course.

Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Instructor for this course
Course Syllabus
INTRODUCTION AND OVERVIEW
  Introduction to 409A Valuations8:56
409A Valuations
  GAAP9:48
  Valuation4:34
  Income Approach8:55
  How is Equity Value Determined?6:25
  Option Pricing Method12:10
  Wrapping Up and Going Beyond10:15
CONCLUSION
  Conclusion5:50
CONTINUOUS PLAY
  409A Valuations1:06:53
SUPPORTING MATERIALS
  Slides: 409A ValuationsPDF
  409A Valuations Glossary/IndexPDF
REVIEW AND TEST
  REVIEW QUESTIONSquiz
 FINAL EXAMexam