1 min read. Any private company (including non-U.S. companies) that issues equity-based compensation to U.S. employees (and advisors) would need to comply with Section 409A of the U.S. Internal Revenue Code, which essentially requires, among other things, that stock options and other equity incentives issues are not priced below fair market value when issued. How often do companies need to update their 409A valuation? A new 409A valuation must be performed whenever there is a material corporate event, including: – Issuing employee stock options or shares for the first time– Raising a round of funding– Turnover of significant employees in […]
Daily Archives: June 9, 2021
2 posts
1 min read. A business valuation typically involves determining the future cashflows that a company will generate and applying an appropriate multiple on the cashflows to arrive at the value of operations. The most common error I’ve seen in business valuations done, including those generated by online valuation software, is that cash on hand is automatically added to value without assessing if it’s needed for operations. Similar errors include adding the net tangible assets to equity value. These are working capital (i.e. accounts receivable, net of accounts payables, inventory, etc.) and capital assets such as equipment and trucks, etc. These […]