You will need to provide a fairly extensive list of documents. The following is an overview of what you will be expected to provide to fullfill 409A valuation requirements. It is not necessarily an exhaustive list, as your appraiser may ask for additional documents as they work through the valuation. To help get your IRC Section 409A valuation started right away, it is helpful to get all these documents ready in advance.
- Articles of Incorporation
- Company Bylaws
If you have made any changes to your articles of incorporation, such as adding classes of shares, then you will have to provide:
- Amended and Restated Articles of Incorporation
- Management Biographies (can be a link to the relevant page of your company website)
If you have had a code 409A valuation performed before, then:
- All Previous IRC Section 409A Valuations
For all companies, even if you incorporated last week:
- Year to date Income Statement for the period ending on the valuation date
- Balance Sheet as of the valuation date
- Trial balance
If your company has been around for more than a year:
- 5 years of Income Statements (or since incorporation)
- 5 years of Balance Sheets (or since incorporation)
- 5 years of Statements of Cash Flows (or since incorporation)
Companies with meaningful revenues have to provide:
- 5 years of revenue, expense and tax rate projections
What do I mean by meaningful revenue? Think about it this way: is it possible to imagine using your revenue to value your company? If yes, then get your 5 year projections ready and submit them along with your other documents. If you submit your projections and your private company appraiser doesn’t do a discounted cash flow calculation, then you are no worse off. If you don’t and they want to run the calculation, then it could delay your valuation.
Companies that have subsidiaries which have their own separate accounts:
- All the above financial information for any subsidiaries
If your company has issued stock options or warrants:
- A schedule of options and/or warrants
If your company has any outstanding debt (including convertible debt):
- Debt agreements
Other than the above documents, you will also be asked to provide some information about your company. But it is your company so it is likely have no preparation will be required to answer those questions.
Are you ready to start your 409A valuation? Contact us, and one of our appraisers will be in touch and we can get your valuation started.