It’s what you’re paying for when you hire an attorney, your accountant, or even a plumber.
And it’s no different when it comes to choosing a 409A provider for your company’s 409A valuation.
Getting a 409A valuation is not the place to try out a first timer or give someone their big break. Your 409A valuation determines the value of your company’s common stock, which will always affect the strike price of any employee stock option grants. Not to mention, if your company is audited, that 409A valuation needs to stand up to scrutiny.
- Independent 409A Valuations – How to Choose a Firm
- How to Find the Right 409A Provider…and Why It Really Matters
- 409A Process: Best Practices and What to Expect
How Can You Tell if A 409A Firm is Experienced?
There are a couple of ways to determine how experienced a 409A provider is.
Sometimes, you need to do a little sleuthing:
- Go to their website
- Search for them online
- Check them out on LinkedIn (and their employees)
- Ask your contacts and associates
After you’ve checked them out from a distance, ask them some questions:
- Do you guarantee indefinite audit defense for all your 409A valuations?
- Can any of the big 4 audit firms confirm your defensibility?
- Have you had trouble passing an audit?
If they don’t look legit from a distance and they can’t answer those questions to your satisfaction, they probably don’t have enough experience to do your 409A valuation properly.
Here’s a List of Some Highly Experienced 409A Firms:
- Andersen Tax
- Duff & Phelps
- Econ Partners
- Frank, Rimerman + Co.
- Pagemill Partners
- Quist Valuations
- Scalar Analytics
- Shareworks Valuation Services
If you’re familiar with the 409A business valuation space, you may have noticed one very recognizable name missing from that list. Here’s why…
What Happened to SVBA?
Last fall one of the largest mergers in the 409A business valuation space happened between Silicon Valley Bank Analytics (SVBA) and Carta.
But that’s not where the story ended. Shortly after the acquisition, all five of the senior partners at SVBA decided not to be part of the acquisition. One joined a different valuation firm. The remaining 4 joined Shareworks Valuation Services (then called Solium Analytics) (full disclosure: Shareworks by Morgan Stanley is the parent company of both Shareworks Valuation Services and Shareworks Startup Edition). So, 4 out of 5 senior partners at SVBA decided to take their experience to Shareworks Valuation Services.
Shareworks Valuation Services operates out of San Francisco, CA and heads up Shareworks by Morgan Stanley's arm of the valuation tools and services industry, specializing in 409A valuations, ASC 820 and ASC 718.
Here’s a closer look at the Shareworks Valuation Services (formerly Solium Analytics) team:
You can read more about Shareworks Valuation Services in this press release.
Why Should Experience Matter to You?
When you’re looking for a 409A provider, you’ll want a firm that will help you with your current valuation and future valuations. In this way, experience isn’t just about who has the most years or valuations under their belt.
That’s important, yes, but a really experienced 409A provider also understands the relationship they have with clients and is prepared to help them get the best valuation they can. It also means they will stand by that valuation in the future and support you down the line.
It’s also important to know that choosing an experienced 409A provider, like a third-party valuation firm, will get you Safe Harbor, which is essentially audit protection from the IRS. You can read more about Safe Harbor here.
We’re really happy to be working more with Solium Analytics (now Shareworks Valuation Services) because they understand the value of experience and customer relationships. Some of the partners shared with us why they chose to move to Solium (now Shareworks by Morgan Stanley) rather than stay with the acquisition. They said, “Carta had a different model and a different philosophy than what we were looking for. They weren’t focused on building relationships with clients, which is what has always come first for us.”
There’s another big reason you should care about this…
How Much Does Experience Cost?
That’s a very important question when looking for a 409A valuation, and typically, hiring the best means paying a premium. But that doesn’t have to be the case.
Because we partner with some of the best firms in the USA, we have arranged the best pricing for your 409A valuation, set up as a monthly subscription.
Our partnerships guarantee the most affordable, quality and defensible 409A valuations for our clients at the best prices.
Please contact our team if you have questions about getting a 409A valuation.