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What is a 409A Valuation?
A 409A valuation is an independent appraisal of the fair market value (FMV) of a private company's common stock. Named after Section 409A of the Internal Revenue Code, this valuation is essential for any company that issues stock options or other equity compensation to employees, contractors, or advisors.
Without a proper 409A valuation, companies risk issuing stock options below fair market value, which can trigger significant tax penalties for option holders—including immediate income tax on unvested options and a 20% additional tax penalty.
Our 409A valuation service provides the independent, qualified appraisal your company needs to establish safe harbor protection and ensure compliance with IRS regulations.
When You Need a 409A Valuation
- Before granting your first stock options
- Every 12 months to maintain compliance
- After closing a new funding round
- Following a material business event
- Before an M&A transaction or IPO
AI Does the Heavy Lifting. Credentialed Experts Sign Off.
AI handles the modeling, benchmarking, and analysis so our credentialed appraisers can focus on what matters: reviewing, verifying, and signing off on your report. Same quality, fraction of the price, zero risk to try.
Upload Company Data
Cap table, financials, and company details
Valuation Engine
AI modeling, benchmarking, and scenario analysis
Review Your Report
Receive your initial report. Review the findings and add comments.
Independent Expert Review
Professional valuation sign-off for defensibility
Final 409A Report
Audit-ready, compliant, and investor-grade
Why Startups Are Moving Beyond Traditional 409A Firms
Traditional valuations rely on manual workflows, long back-and-forth cycles, and pricing that doesn't scale with early-stage companies. Our platform replaces most of that friction with automation.
Traditional 409A Firms vs. Our AI-Powered Platform
| Traditional Valuation Firms | AI-Powered Platform | |
|---|---|---|
| Process | Manual, consultant-led | AI-powered, with expert review |
| Timeline | 2–4 weeks | 2–5 business days |
| Founder Effort | Repeated back-and-forth | Structured, guided workflow |
| Cost Structure | High, fixed fees | Lower, predictable pricing |
| Consistency | Varies by analyst | Standardized modeling |
| Compliance | IRS 409A | IRS 409A |
| Audit Defensibility | Varies by firm | Independent appraiser sign-off on every report |
| Cost | $1,500–$5,000+ | From $499 |
| Getting Started | Paid engagement required | Free initial report — only pay for professional review and sign-off from $499. |
| Commitment to Start | Paid engagement | None — try free |
| Credit Card Required | Yes | No |
Automation enhances speed and consistency — professional oversight ensures compliance and defensibility.
* All paid plans include credentialed reviewer sign-off meeting IRS safe harbor requirements.
“Having overseen global tax and valuation matters for both public and private companies, I value solutions that reduce friction without compromising rigor or compliance. This platform delivers a thoughtful, modern approach to 409A valuations—combining automation, standardized methodology, and expert oversight to produce faster, more efficient, and audit-ready outcomes.”
“409A-valuation.com delivered a well-structured and compliant 409A valuation report quickly and completely. Their team was professional, responsive, thorough, and easy to work with. We would work with them again in the future.”
David Lewis
Difratech
“As a robotics company, we move fast and our team’s equity matters. 409A-valuation.com got us clean, fully compliant 409A reports without slowing us down. Professional, efficient, and exactly what we needed. Also, they were terrifically responsive, there are human beings behind the AI!”
“Good experience overall, we will be back.”
Chief Financial Officer, August Robotics
“As a startup executive preparing our company for financing discussions, obtaining a credible, defensible valuation was an important step. The team at 409A Valuation delivered a thoughtful, well-structured, and audit-ready report with a level of rigor and responsiveness that gave us confidence in the process. Their team was highly professional, easy to work with, and took the time to understand our business, stage of development, and market context. The process was efficient, transparent, and ultimately helped position us more effectively for investor conversations. Will definitely work with them again in the future.”
K2INOV8
Who Needs a 409A Valuation?
If your company issues stock options or equity compensation, you likely need a 409A valuation to stay compliant with IRS regulations.
Early-Stage Startups
Pre-seed and seed-stage companies preparing to issue their first stock options to founders, employees, or advisors.
Venture-Backed Companies
Series A through late-stage companies that need updated valuations after each funding round or material business event.
Private Companies
Established private businesses using equity compensation as part of their employee retention and recruitment strategy.
Pre-Exit Companies
Companies preparing for an acquisition, merger, or IPO that need current fair market value documentation.
Built for Compliance, Not Shortcuts
Every valuation is prepared in accordance with IRS Section 409A safe-harbor principles and reviewed by qualified valuation professionals.
- Independent appraiser review
- Defensible methodologies
- Secure data handling
- NDA available upon request
Frequently Asked Questions About 409A Valuations
Everything you need to know about 409A valuations and our service.
What is a 409A valuation and why do I need one?
A 409A valuation is an independent appraisal of your company's common stock fair market value, required by IRS Section 409A. You need one to issue stock options at fair market value, which protects your employees from significant tax penalties and your company from potential IRS issues. Without a proper 409A valuation, option holders could face immediate taxation on unvested options plus a 20% penalty tax.
How often do I need to update my 409A valuation?
Generally, a 409A valuation is valid for 12 months. However, you'll need a new valuation sooner if a "material event" occurs—such as closing a new funding round, significant changes in revenue or customer base, launching new products, or any event that substantially affects your company's value. Most venture-backed startups get a new 409A valuation after each funding round.
What is safe harbor protection and how do I get it?
Safe harbor protection means the IRS will presume your stock option exercise price is at fair market value if your valuation meets certain requirements. To qualify, your 409A valuation must be performed by a qualified independent appraiser using accepted valuation methods. Our valuations are specifically designed to meet all safe harbor requirements, protecting your company from IRS challenges.
How is fair market value determined in a 409A valuation?
Fair market value is determined using multiple valuation methodologies, typically including the market approach (comparing to similar company transactions), income approach (discounted cash flow analysis), and asset-based approach. For startups, we also consider recent funding rounds, applying appropriate discounts for lack of marketability and comparing common stock to preferred stock terms.
What documents do I need for a 409A valuation?
Typically, you'll need to provide your cap table, recent financial statements (balance sheet and income statement), any recent funding documents or term sheets, board meeting minutes, and information about your business model and projections. Our platform guides you through exactly what's needed and makes uploading documents simple and secure.
How long does it take to get a 409A valuation?
Our AI-powered platform delivers your completed 409A valuation report in days rather than the 2-4 weeks typical of traditional 409A valuation providers. The exact timeline depends on how quickly you can provide the required documents and the complexity of your cap table and business structure.
A Smarter Way to Get Your 409A Done
IRS safe harbor compliant. Independent appraiser sign-off included. Delivered in days, not weeks.