an assessment of the fair market value of company’s common stock

A 409A valuation is an assessment of the fair market value of company’s common stock.

a formal report that documents the value of your company’s common stock for the purpose of granting stock options

A 409A valuation is a formal report that documents the value of your company’s common stock for the purpose of granting stock options.

An independent third party’s evaluation of the fair market valuer or the FMV of the equity shares of a private corporation

An independent third party’s evaluation of the fair market valuer or the FMV of the equity shares of a private corporation is known as a 409a valuation.

a method of calculating fair market value ( FMV

In other words, the 409A valuation is a method of calculating fair market value (FMV) according to the regulations under the Internal Revenue Code (IRC).

by law

A 409A valuation is required by law in order to issue stock options, and a 409A violation—for example, issuing options priced lower than your company’s FMV—comes with severe penalties for employees, even if their options have expired.

a formal report that sets the current value of your company's common stock and the strike price to exercise an option to purchase that stock

A 409A Valuation is a formal report that sets the current value of your company's common stock and the strike price to exercise an option to purchase that stock.

This valuation report from a third party firm

This valuation report from a third party firm is called a 409a valuation.

in order to issue stock options

A 409A valuation is required by law in order to issue stock options, and a 409A violation—for example, issuing options priced lower than your company’s FMV—comes with severe penalties for employees, even if their options have expired.

by third-parties

The valuation change was not triggered by a new funding round, but instead a new 409A price change; 409A valuations are set by third parties, which means that they are not tied to what a venture backer or other investor thinks.

an independent appraisal process used to establish the strike price for newly granted stock options

A 409A valuation is an independent appraisal process used to establish the strike price for newly granted stock options.

a formal valuation conducted by an independent third party to set the strike price for stock options issued to employees and other service providers

A 409A valuation is a formal valuation conducted by an independent third party to set the strike price for stock options issued to employees and other service providers.

an appraisal done for tax purposes and done annually or upon a new round of financing

The 409A valuation is an appraisal done for tax purposes and done annually or upon a new round of financing.

the process that answers the question “how much is this company worth

A 409A valuation is the process that answers the question “how much is this company worth?”

an independent appraisal completed by a company

Current 409A price: A 409A valuation is an independent appraisal completed by a company and filed with the Internal Revenue Code (IRC).