409A valuations providers create a company’s 409A report, which provides a fair market value of a company’s common stock. Upon receiving a request for a report, these firms assign a team of analysts to assess an organization’s value by reviewing business-provided financial information. These reports are especially useful to startup companies that are considering offering stock options to employees, investors, and contractors.
A 409A valuation is required by law to ensure a business is in compliance with federal tax code, saving companies from incurring any tax penalties. If a business receives any additional funding after the 409A valuation is created, the firm that completed the original report should update it so all information is accurate. 409A valuations providers often offer additional tax services to businesses as well.
To qualify for inclusion in the 409A Valuations Providers category, a services provider must:
- Provide an assessment of a fair market value of a business’ common stock in the form of a 409A valuation report
- Assign a team of analysts to assess organizations
- Ensure organization are in compliance with federal tax code
- Provide an updated 409A valuation report, should funding status change
