Entries by datadrivendesign

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Does My Company Need a 409A Valuation?

Have you heard of IRC Section 409A and wondered if it applied to your company? Do you think you might be in need of a 409A valuation but are unsure? Most entrepreneurs have never heard of IRC Section 409A , if you haven’t then check out our article here (https://simple409.wpengine.com/why-do-i-need-to-get-a-section-409a-valuation/). The majority of earlier stage […]

How do I determine fair market value for an 83b election?

If you already know you need to file an 83b election then the first question you probably have is how do I determine the fair market value of the “property” for the election? There are a few ways to go about determining the fair market value of the shares in your 83b election. If your […]

Valuation Methods – The Asset Approach

The asset approach is one of the three approaches (along with the market approach and income approach) used to estimate enterprise and equity value, and is used in IRC 409A valuations.  The asset approach is defined in the International Glossary of Business Valuation Terms as “a general way of determining a value indication of a […]

How Long Does a 409A Valuation Take?

The time to complete a 409A valuation can range significantly: from a few days to a few months – mostly depending on the needs and the situation of the client. To get an idea of how the completion time of a 409A appraisal can vary so dramatically, it is important to understand the whole process, […]

Valuation Methods – The Income Approach

The Income Approach is one of the three approaches (along with the Market Approach and Asset Approach) used to estimate enterprise and equity value. The income approach seeks to identify the future economic benefits to be generated by an entity and to compare them with a required rate of return. This numerator/denominator relationship can be […]

409A Valuation Report Components – Industry and Competitor Analysis

The industry and competitor analysis portions of a 409A report review a company’s current market position and assess the environment in which the company is operating. This allows for the valuation of the company to be considered in the operating environment of the market. Industry Analysis There are several sources to leverage when researching the […]

Do Employees Have to Worry About 409A Penalties?

Sadly, yes. We have covered in other articles the importance of companies meeting safe harbor requirements for 409A by getting a qualified third party 409A valuation, but this regulation is also of great concern to employees. The implications for non-compliance can be severe, including significant 409A penalties. The following is an example of the kind […]

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409A Valuation Report Template

There is really no ‘template’ for a 409A valuation. Section 409A came into being in 2007 and a cottage industry has sprung up to satisfy the reporting requirements, but the IRS has not given a lot in the way of definitive guidelines of what a 409A report should look like. The standards of quality and […]