logo-small.png
- BLOG -

Headquarters

501 Boylston Street, 10th Floor

Boston, MA 02116

(617)-737-5000

info@outsidegc.com

ON-DEMAND INSIGHTS

Stock Options and 409A Valuations in the Private Sector

Stock Options and 409A Valuations in the Private Sector

March 23, 2022 at 11:46 AM - 409A Valuation,

Stock options can serve as an important tool for attracting new talent to your company and retaining top-quality employees or consultants. To avoid tax surprises and penalties, however, options must be issued at exercise prices set at the then-current value of the company’s stock. Although publicly-traded companies can easily determine this value, a private company has no readily available source for the current value, and therefore, must determine the fair market value of the company’s stock pursuant to Section 409(A) of the Internal Revenue Code (IRC) – hence the name “409(A) Valuation.” Despite the complexity which the term “409(A) valuation” suggests, it is not mandatory that a company engage a valuation company to perform the valuation. And if your company is a start-up with limited assets and no income, you may justifiably wonder if procuring a formal valuation is worthwhile. In fact, a company can comply with Section 409(A) without engaging a third-party valuation expert; this approach, however, is not risk-free.

Continue Reading

Subscribe to our Blog

Popular Posts

   
This publication should not be construed as legal advice or a legal opinion on any specific facts or circumstances nor an offer to represent you. It is not intended to create, and receipt does not constitute, an attorney-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal questions you may have. Pursuant to applicable rules of professional conduct, portions of this publication may constitute Attorney Advertising.

Outside GC is an innovative approach to legal services for growing and mature businesses. Companies who engage Outside GC fall into two main categories: (1) those without in-house counsel who need regular, on-going legal support but do not wish to hire a full-time in-house lawyer, and (2) those with in-house counsel who do not wish to add more full-time resources to their existing in-house staff. Contact us to speak to one of our on-demand attorneys.