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409A Valuations

409A Valuations


Armanino provides independent third-party valuations for IRC 409A and ASC 718 compliance. To determine value, our professionals analyze each client’s business and financial plans, history, and projections. We use in-house resources that understand the whole valuation process. We value more than 250 companies a year located around the world for tax, financial reporting requirements, and other purposes.

What makes an IRC 409A unique? 

Armanino only employs its own staff domiciled in the U.S.A. to prepare 409A valuations, and is one of the leading valuation firms serving venture capital backed companies. Our specialty is technology companies, which we have served with our financial services since 1987. Additionally, Armanino defends its 409A valuations and assists clients with auditors or other outside entities that review IRC 409A valuation opinions.

Why is an IRC 409A valuation important? 

Under IRC Section 409A, first released in 2004, privately owned companies such as those in Silicon Valley are required to establish that stock options are being issued at no less than fair market value at the time granted in order to avoid a potentially painful tax liability for the grantee and company. Companies either considering or currently issuing stock options, restricted stock, or any other form of equity compensation should consider an independent IRC 409A valuation annually and more frequently if there is a change in the business which could result in a change of the implied market value of the common stock.

What is the process for an IRC 409A valuation? 

Armanino assigns a team of experienced professionals and expeditiously performs a rigorous independent IRC 409A valuation incorporating standards published by the IRS and the AICPA. All of our valuations are performed by senior professionals of the Firm and include in-depth analysis of the company and its industry. Armanino delivers a written report detailing the fair market value of the security based on multiple valuation methodologies and including detailed calculations that support the conclusion.

How long does it take? 

In addition to interaction with client financial staff (management interviews, document collection, data validation, etc.), normal turnaround time is approximately three to four weeks.

ASC 718 / FAS 123R 

In addition to providing valuations for IRC 409A purposes, we routinely perform valuations to meet the requirements of ASC 718 (previously FAS 123R).  Further, the equity accounting experts on our team, also assist many clients with the actual calculation of stock-based compensation expense, whether in a spreadsheet or in an equity administration software.