Getting a 409A valuation is important for some companies. If you agree with the statement and want to get one for your company, you might be wondering who can perform a 409A valuation. Check out the answer to the question below.
There are a total of three things that can perform a 409A valuation. Every single thing will be explained below:
- Yourself
If you are confident that you are able to do the valuation by yourself, go for it. However, you need to make sure that you have knowledge, experience, education, as well as training to perform a 409A valuation. This method is fine for the eligible companies.
If you are considered as an expert and are good at the field of valuation, performing a 409A valuation by yourself is good as it will save the money in your pocket. Not only that, the benefit includes having much higher control over the valuation of the common stock of your company. However, you might find a hard time depending on yourself in case there is any mistake or if there is an IRS audit. Another minus point of performing a 409A valuation by yourself is you would not get the safe harbor protection. In fact, it is only possible for the company to be able to get the safe harbor status if the 409A valuation is performed according to the IRS rules, which is usually performed by the third party professional. If you do not use a third party professional, you will have to prove the valuation of your company when the IRS makes a visit to audit your company.
- Valuation software’s
The next method to get the 409A valuation is to use valuation software. One of the good things of using the software applications is that there will be no need for you to spend a lot of time getting the final valuation. For your information, the normal 409A valuation takes weeks to months until you get the results. Not only that, the money that you would have spent on the professional appraiser can be saved.
On the internet, there are a total of two kinds of software applications that can be found. The first one is free while another is paid. If you want to save money, you can use the first one. However, if you want to get a more accurate valuation for your company, using the second one is recommended.
Aside from offering some advantages, the method of using the valuation software also has some drawbacks. By using this method, you will not be able to get safe harbor protection. Besides, you will also have to prove the validation of your company just in case the IRS comes to audit your company. In addition, this kind of software is not the kind of one that can be used easily. To be able to use it, you may have to fit specific criteria for the inputs of the company data so that it can make sense for the ultimate valuation. This aspect may be the reason why it is not the best option to use.
- Expert consulting from a valuation service provider
In addition to these two, the last one that can perform a 409A valuation is expert consulting from a valuation service provider. If you prefer this method, you can hire a professional valuation service provider. If you are wondering how much does it cost for you to use their service, you are suggested to contact them and discuss the details.
Compared to the first two, this one is the most expensive. However, it is worth it as it offers a few things that others don’t. One of the things that you will get by using this method is the safe harbor status. By having it in hand, there will be no need for you to prove the valuation of your company when the IRS makes a visit to audit your company. Basically, this method is best to reduce the risks when it comes to the safe harbor status and any possible penalties from the IRS.
There are a lot of professional valuation services providers in the world to choose from. The best one to hire is the one that has experience, knowledge, and can give reliable services for your company. If you have no idea which provider to choose, one of the most recommended ones is Eqvista. This professional valuation service provider offers affordable and efficient solutions for companies managing their company equity. If you are wondering how much it costs to get a 409A valuation with Eqvista, the price starts from $990 and goes up based on a few things, such as the age and the history of the company, the industry, and many more.
To be able to get a 409A valuation from Eqvista, there are some steps to follow, including:
- The first thing that you have to do is to give your data, such as your cap table, articles of incorporation, financial projections, term sheets, pass a 409A report if there is any, and some other required documents.
- Then, give quotations, sign engagement letters and settle fees. In this stage, the price for the 409A valuation will be discussed. If you agree with everything, you will be sent with an engagement letter outlining the 409A valuation services of Eqvista. The process of valuation will be started after the process of signing the letter and settlement of the fees.
- Next, run the report. When the process of valuation is on going, you may be asked some follow up questions.
- After that, review the first draft.
- After reviewing the first draft, it is time for revisions that usually takes from 1 to 3 days.
- When everything is done, the final report will be delivered.
For more information about getting a 409A valuation with Eqvista, it is better for you to visit the official website of Eqvista. Go contact them if you have something to ask.
