409A Valuations

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.