Get a 409A valuation

Frequently asked questions

• What is a 409A valuation?

  A 409A valuation is a type of valuation that determines the fair market value (FMV) of a company’s share price. It is the USA equivalent that’s needed when a company grants share options to US taxpayers. 

• What is a 409A valuation for?

  Much like how an HMRC-approved valuation is needed when granting EMI options to UK employees, a 409A valuation is needed when granting any type of stock option to US taxpayers.

  You will need a valid 409A valuation if you are:

  • a UK company granting options to US employees: When a UK company is issuing any type of stock option to their US-based employees. 
  • UK company granting options to any US taxpayer: This includes companies, contractors, consultants and subsidiaries. 
  • a UK parent company with US subsidiaries (or vice-versa): it’s likely that a 409A valuation will be completed every 12 months as standard practice.

   

  We go into more detail in our blog.

  Need help figuring it out? Talk to us.

• When should I get a 409A valuation?

  Before you offer stock options to US employees or any US taxpayer, you'll need a 409a valuation approved by the Internal Revenue Service (IRS).

• How often do I need one?

  The validity of the 409A valuation is 12 months unless there’s a material change to the company’s fair market value (FMV) in that time – such as a funding round. In case of any changes, we can take care of notifying you of upcoming deadlines.
  

• Why would I want a low 409A valuation?

  You may want a low 409a valuation, so you can offer employees stock options at a lower exercise price.

  If the value of the business grows, those options will, in theory, become more valuable. We talk a little more about low business valuations here.

  However, it's important to prepare a realistic valuation. If your 409a valuation is too low, that might raise alarm bells with the IRS.

  Our experience of valuing companies for share schemes means we can readily produce what you need to gain an IRS-approved valuation.

• What’s the cost of a 409A valuation?

  We charge a small, yearly fee to give you an expert-determined 409A valuation.