409A Valuation

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Summary of What Companies and Their Advisors Should Know

  • IRC 409A became part of the tax code in January 2005
  • IRC 409A broadly applies to deferred compensation and, for companies issuing non-qualified stock options, 409A creates compliance needs
  • To avoid creating a taxable event for employees at the time of grant, non-qualified stock options must be issued at Fair Market Value
    • As private companies do not have an active market for their stock a valuation must be performed to determine the Fair Market Value
    • Given IRS safe harbor presumptions, common practice is to engage an independent appraiser to provide a valuation report
  • Information needed to perform an analysis is generally readily available with some minor exceptions that are easily prepared
  • Expect a valuation to take ten business days or less from receipt of the needed information
    • Greener Equity asks for ten days, but can move faster if needed
    • You should not overpay for a valuation

The Greener Equity Difference

  • The Greener Equity team hails from top global advisory and accounting firms like Deutsche Bank, BofA Merrill Lynch, Deloitte, PWC, KPMG, Grant Thornton, and Andersen Tax
  • We believe that no valuation firm does more 409A valuations than Greener Equity – our unique combination of quality and value is broadly recognized in the market
  • In addition to the firm’s team having experience at top firms, our senior team has been CFOs of growth-stage companies which we led through multiple transactions – we know where our clients are coming from as, unlike almost any valuation firm you could find, we’ve actually been there
  • “If we focus on our clients’ success, our own success will follow” We care deeply about delivering quality, value, and a great client experience