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409A Valuations
What do I look for in a 409A valuation?
What do I look for in a 409A valuation?
Yin Wu avatar
Written by Yin Wu
Updated over a week ago

What is a 409A valuation and why do I care?

A 409A valuation is an independent appraisal of your company that enables you to hire and grant stock options to employees.

What happens if I don't get a 409A valuation?

Tax liabilities if the IRS determines that your options were undervalued. The lack of a 409A will raise a red flag to investors and their lawyers on funding rounds.

What should I look for in a 409A provider?

  1. Defensible - 409As should stand up to the most aggressive auditors and the IRS. Choose a provider with a long history of defensible 409As and a client base covering your industry.

  2. Independent - An independent appraiser shifts the burden of proof to the IRS to show your options are undervalued. Avoid risk by choosing an appraiser that you don't use for other services.

  3. Speed & Accuracy - A 409A can be a barrier to issuing options and hiring. Choose a provider that completes 409A valuations quickly and accurately.

Why get a 409A through Pulley?

There are several reasons why Pulley stands out as a preferred valuation provider: Defensibility, speed, cost-effectiveness, and security. We streamline the process and connect the 409A valuation to the rest of your cap table while you focus on building a great company. You can read more about Pulley’s Valuation process here.

What type of experience does Pulley’s Valuation team have?
Our Valuations team has extensive experience, having performed over 2,000 valuations for privately held companies across various industries, including software development, web-3, information technology, and biotech. These valuations serve multiple purposes, such as 409A valuations, token valuations, employee stock ownership plans, gift and estate valuations, sales and acquisitions, financial reporting, and litigation. Our team members have played a crucial role in helping numerous companies achieve successful exits through acquisitions and IPOs, with a cumulative market capitalization exceeding $20 billion.

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