409A Early-Stage Valuations: The Value Proposition

“Price, timeliness, and quality, I always tell the client that you can pick two of the three.”  These were the words of wisdom a Deloitte partner passed down to me as a first year valuation manager. Now, having been in professional services for over a decade, I understand intimately the intricate trade-offs among fixed fee engagements, hourly rates, expedited service and quality. But is it possible to experience professional-grade service without breaking the budget? The answer is yes – by complementing a skilled team with technology enablement.

At Shareworks Valuation Services, we use technology to automate certain onboarding and scoping processes for early-stage 409A valuations. Technology helps us streamline the process for our clients, so we can spend time on what really matters—delivering a quality valuation.

In the startup arena, people tend to overemphasize automation and self-service. A founder once told me that he loved his 409A valuation experience because he received a report without having to talk to anyone. At the same time, he couldn’t tell me the name of his provider. That may work in the short-term, but how do you know you’re getting a credible valuation? Does that approach work when you need something more?

Questions to ask a potential 409A valuation advisor

• Does your valuation provider have relevant industry expertise and an understanding of your business model, so your company can be properly valued?
• Will you have a dedicated team who will answer your questions and calls? Or will they simply base all their decisions on a 20-minute management call, and call it a day?
• Will they be able to provide you insights on related valuation matters (e.g., secondary transactions, warrant liabilities, etc.) from their expansive client base?
• Will they be able to scale with your future growth?
• Do they provide robust audit review support when your company requires audited financial statements (sometimes even retrospectively)?
• And when your company is ready to go public, do they have experience to guide you through the S-1 filing process?

Regardless of your stage of development, you deserve to have a trusted partner who can grow with you, and be available to alleviate management stress. For all founders who are passionate about building a world-class business, we believe that this message resonates.

Questions about 409A?

I would love to help! Drop me a line and let’s connect.

About the Author

Betty Ma is a Managing Director with Shareworks by Morgan Stanley, responsible for managing strategic partnerships and execution of client engagements. Betty was previously with SVB Analytics, where she led the Financial Advisory Services valuation practice and provided advisory services to venture-backed technology companies. Prior to joining SVB, Betty worked at Deloitte Financial Advisory Services LLP, with a focus on intangible assets and impairment valuations. Betty also has audit experience with PwC’s financial services group. Betty is a CFA charter holder and a licensed CPA in the state of California. Betty graduated summa cum laude with both master of accounting and bachelor of science degrees in business administration from the University of Southern California.

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