You Are Here: Home » Posts tagged "409A"

The Most Underutilized Tool in Business Valuation

The Use of Common Sense and Experience The acceptance of tools such as Monte Carlo simulation and Option Pricing models has changed our ability to value options, warrants, and derivative instruments. The list goes on and on. However, as many of us are fond of saying, valuation is as much an art as it is a science. Many of our tools address the science, not so many of them address the art. In my opinion, one ...

Read more

Using the Option Pricing Method Changes the Standard of Value

Does the IRS or Anyone Care? (Part II of II) Part one of this article presented the “current method” and “option pricing method” (OPM) for allocating value to common stock for 409a valuations, and how these two methods differ in pricing of common stock. Part two examines the implied changes made by OPM and how it affects stakeholders. The article begins with a brief review of the key impacts on the valuatio ...

Read more

Using the Option Pricing Method Changes the Standard of Value

Does the IRS or Anyone Care? (Part I of II) In part one of this two-part article, the author presents the two methods for allocating value to common stock for 409a valuations, and then show how they affect the pricing of common stock. By way of background, to meet FMV, the standard of value requires measuring value under the representation of a hypothetical willing buyer and a hypothetical willing seller, b ...

Read more

The IRS Equity Compensation Audit Guide

Obviously, every equity compensation plan is different and the particular tax treatment of a given security depends on the facts and circumstances of the arrangement.  Samantha L. Albert, senior financial analyst with Mercer Capital, examines equity-based compensation and the tools available when examining these arrangements. To read more about the results of this report in the Mercer Capital's Financial Re ...

Read more

A Few Thoughts on Valuing Investments in Startups: An Interview with Travis Harms

The need to develop reliable, defensible fair value markets for hard-to-value assets is universal.  Sujan Rajbhandary, senior member of Mercer Capital’s Financial Reporting Valuation Group, sits down with Travis Harms to get his insight from a financial reporting perspective on a few issues around valuations of startups. To read more about the results of this report in the Mercer Capital's Financial Reporti ...

Read more

Treatment of Selling/Employee Shareholder

Transition Period Payments After a Business Acquisition Owner’s of closely held businesses will usually be required to remain active in the business after the same is sold. This article examines two key questions related to such post-transaction transition payments: (1) how much should the buyer pay to the sellers for these transition period services, and (2) how should these transition period payments be s ...

Read more

50 Reasons for a Business Appraisal

Creating Value for Business Owners and Board Members In this article, Edward Mendlowitz, CPA, ABA, CFF. shares his views regarding the importance of having a business valued. He identifies 50 ways that a valuation professional can provide something far more valuable than a number. While the valuation profession is under pressure to reduce costs or prepare a report, the business owner is better served in the ...

Read more

409A Options Valuations: Who Pays the Price and What We Can Do

UConnect v. Facebook Showed How 409A Valuations Can Destroy Value. Here’s What Shareholders and VCs Need to Know—and Some Ideas About How to Better the Situation. Lorenzo Carver previously explained how 409A valuations destroy value for shareholders receiving grants, and provided a case study of how this all played out in UConnect v. Facebook. In this final article in a three-part series, Carver presents us ...

Read more

Part II: Dual-Purpose 409A Valuations: Here’s Why and How They Overvalue Stock Options

The Winklevoss Twins Realized Too Late the Value They’d Agreed to for Their Common Shares of Facebook. Here’s How it Played Out. Last week Lorenzo Carver introduced the topic of how 409A valuations destroy value for some shareholders.  Today’s piece is a case study in how a wide disparity in value estimates largely created by the 409A process played out in the UConnect v. Facebook lawsuit. ...

Read more

Dual-Purpose 409A Valuations: Here’s Why and How They Overvalue Stock Options

Why Built-up Volatility Rates Produce Better Value Indications In part one of a three-part series, Lorenzo Carver explains how the interaction between auditors and valuation professionals during dual-purpose 409A valuations of common stock and employee stock options destroys value for hundreds of thousands of employees receiving stock options every year by granting options at strike prices that are above th ...

Read more

©2021 NACVA and the Consultants' Training Institute • (800) 677-2009 • 1218 East 7800 South, Suite 302, Sandy, UT 84094 USA

event themes - theme rewards

Scroll to top
UA-49898941-1
lw