409A Valuation

A 409A valuation is an independent assessment of a private company's fair market value, primarily used for setting the exercise price of stock options. This valuation helps ensure compliance with IRS regulations, preventing potential tax issues for employees who receive options. It considers factors like the company's financial health, assets, market conditions, and growth potential. Conducting a 409A valuation regularly mitigates risks of penalties, and ensures stakeholders have an accurate, fair estimate of the company's value, facilitating transparent and compliant equity compensation practices.