How to Get a 409A Valuation: A Step-by-Step Buyer's Guide

How this page fits with our other guides: This is the buyer's procurement guide. What the appraiser does once you have hired one, from the analysis to sign-off, is covered in our 409A valuation process guide. The full document list is in the 409A preparation checklist, and vetting an individual appraiser is covered in how to hire a 409A valuation consultant. We link to those pages rather than repeat them.

When do you need to get a 409A valuation?

Before your first stock option grant, then at least every 12 months while you keep granting, and again after any material event that could change the value of your common stock, such as a priced financing round, a large SAFE or convertible note, an acquisition offer, or a major shift in revenue.

The reason is the exercise price. An option escapes Section 409A only if its exercise price can never be less than the fair market value of the underlying common stock on the grant date. Incentive stock options have the same requirement under Section 422. A private company has no market price to point to, so it needs a valuation to show where fair market value is.

The practical triggers to watch:

• The first grant. An offer letter that promises options is the usual starting gun. Order the valuation when the offer goes out, not when the board meeting is scheduled.
• The 12-month mark. The independent appraisal safe harbor covers grants made within 12 months of the valuation date. Our guide to the annual 409A renewal covers how to schedule it.
• Material events. A value is not reasonable if it ignores information that could materially affect it. A new priced round is the most common example; the list of others is in our guide to material events that require a new 409A.
• Outside requests. Auditors, acquirers and later-stage investors will ask for the valuation behind every grant. A gap in coverage is much harder to fix after the fact than before.

How do you get a 409A valuation?

To get a 409A valuation, choose an independent provider, compare quotes on scope as well as price, sign an engagement letter, and send your cap table, charter, financing documents and financials. Then answer the appraiser's questions, review the draft for factual errors, and have the board adopt the final value before granting options.

In order, the five steps the rest of this guide walks through are:

1. Choose a route: a cap table platform, an online provider, a boutique firm or a large firm.
2. Request quotes and compare what each one actually includes.
3. Sign the engagement letter and send the data package.
4. Take the management call and review the draft report.
5. Receive the final report and have the board adopt it before any grant is approved.

Knowing how to get a 409A valuation quickly is mostly knowing that only steps 3 and 4 involve the appraiser doing analysis. Steps 1, 2 and 5 are yours, and they are where most first-time buyers lose time.

Step 1: Choose How to Obtain a 409A Valuation

The first decision in how to get a 409A valuation is the route. There are four common ways to obtain a 409A valuation, and each of them can deliver a safe harbor report; they differ in price, speed, and how much scrutiny the work is built to withstand.

• Bundled with your cap table platform. Equity management platforms often sell a 409A as an add-on, sometimes discounted with an annual plan. It is convenient because your cap table is already in the system, but check who actually performs and signs the valuation, and whether the price holds when you renew.
• An online or software-based provider. These providers standardize intake and modeling, and a credentialed appraiser reviews and signs the result. This is usually the fastest and least expensive route for seed through Series B companies with a conventional capital structure.
• A boutique valuation firm. A small firm gives you more direct access to a senior appraiser, which helps with unusual structures, complex convertible instruments, or a company with real revenue and several plausible exit paths.
• A large accounting or advisory firm. Usually chosen by late-stage and pre-IPO companies whose auditors will test every grant date under ASC 718. It costs the most and takes the longest, but carries the most weight with a public-company audit team.

The common mistake is to buy for the company you hope to be. A seed company does not need a Big 4 report, and a company filing an S-1 next year should not be using the cheapest option it can find. Our guide to choosing a 409A valuation provider matches provider types to company stage, and boutique vs large 409A firms covers that specific choice in more depth.

One option is off the list: your own law firm, your investors, or anyone with a financial stake in the result. The safe harbor rests on an independent appraisal, and a valuation by someone who benefits from a particular number is weak evidence, however competent they are.

Step 2: Request Quotes and Compare Scope, Not Just Price

Two quotes at the same price can buy very different things. To get a quote, most providers ask for your stage, the date and size of your last financing, the number of share classes, and whether you have SAFEs or convertible notes outstanding. Then ask each provider the same questions, in writing:

• Who signs the report, and what are their credentials? Look for a named individual with a valuation credential such as ASA, ABV, CVA or CFA, and relevant experience. "Our team" is not an answer.
• What does the price include? Ask how many rounds of revisions are covered, whether a call to walk through the draft is included, and what happens if your auditor sends questions six months later.
• What does a refresh cost? If you close a round three months after the valuation, you will need a new one. Some providers price the mid-year update and the annual renewal at a discount; others charge full price again.
• When does the clock start? Turnaround quotes usually run from receipt of a complete data package, not from signing. Ask what "complete" means to them.
• Which methods will you consider? A company with a recent priced round should expect a backsolve to that round to be considered; a company with no financing history should expect an asset or cost approach. A vague answer is a warning sign.
• Can I see a sample report? A redacted sample shows you what your board, your auditor and a future acquirer will actually read.

On price, the ranges for 2026 run from about $499 at online providers to $15,000 or more at large firms, with stage and complexity doing most of the work. The breakdown by provider type and stage is in our 409A valuation cost guide.

Step 3: Sign the Engagement and Send the Data Package

The engagement letter is the contract. Before you sign, check that it states the valuation date (or how it will be set), the subject of the valuation (the fair market value of your common stock), the fee and what it covers, the delivery timeline, and the confidentiality terms. It will also say that the company is responsible for the accuracy of the information it provides, which is the appraiser telling you, correctly, that the report is only as good as your inputs.

Pick the valuation date deliberately. A common choice is the most recent month-end with closed financial statements. If a financing round has just closed, the closing date is a natural choice, because the round is the strongest evidence of value the appraiser will have. Remember that the report covers grants on or after its valuation date, not before.

The data package is where the timeline is won or lost. At a minimum, expect to send:

• A fully diluted cap table as of the valuation date, including outstanding options, the unallocated pool, and warrants.
• Your current certificate of incorporation, which sets out each preferred series' liquidation preference, participation and conversion terms.
• Financing documents for every round, and the terms of every outstanding SAFE and convertible note.
• Historical financial statements and the latest balance sheet, plus your projections if you have them.
• A short business description: product, stage, customers, competitors, runway, and any acquisition interest or secondary sales.

The complete list, with what each item is used for, is in our 409A valuation preparation checklist. The single most common delay is a cap table that does not tie to the charter or to the latest financing documents. Reconcile it before you send it.

Step 4: The Management Call and Draft Review

Most appraisers hold a 30- to 60-minute call with the CEO or CFO, or send a written questionnaire in its place. Expect questions about the business, recent milestones, burn rate and runway, the outlook for the next financing, and any acquisition interest. Answer them directly, including the unflattering parts. A valuation that ignores a known problem is the kind an auditor or the IRS can pick apart later.

The appraiser then builds the analysis and sends a draft. How the methods work is covered in our 409A valuation process guide; your job as the buyer is to review the draft, and to review it for the right things:

• Facts. Share counts by class, liquidation preferences, financing dates and prices, SAFE caps and discounts, and the valuation date. Errors here are common and change the answer.
• Assumptions. Expected time to exit, the probability placed on each exit scenario, volatility, and the discount for lack of marketability (DLOM). You can question an assumption that does not fit your business, with evidence.
• Consistency. If the value moved a lot from your last valuation, the report should explain why.

What you should not do is negotiate toward a target number. Asking an appraiser to "get to" a price undermines the independence the safe harbor depends on, and any email trail showing that pressure becomes evidence against the valuation. Correct facts, challenge assumptions with reasons, and let the conclusion fall where it falls.

Step 5: Final Report and Board Adoption

Once the draft is settled, the appraiser issues the final, signed report. It states the fair market value per share of common stock as of the valuation date. On its own, that number does not protect anyone. Two more things have to happen.

• The board adopts the valuation. At a meeting or by unanimous written consent, the board reviews the report, determines the fair market value of the common stock in reliance on it, and records that in the minutes or consent.
• The board approves grants at or above that value. Each option's exercise price must be at least the fair market value on its grant date, which is generally the date the board approves the grant with its key terms fixed. Granting first and pricing later is a common way to break compliance.

Keep the report, the board resolution and the grant documents together. That is the file an auditor, acquirer or IRS examiner will ask for. Then put two dates on the calendar: the 12-month expiry, and a reminder to check for material events before every later grant.

The Buyer's Timeline at a Glance

The table below shows who acts at each step and how long it typically takes. The ranges assume an early- or growth-stage company with a reasonably organized data room; the provider-by-provider turnaround picture is in our 409A turnaround time guide.

Add it up, and if you are working out how to get a 409A valuation in time for a specific board meeting, an online provider typically gets you from signed engagement to final report in one to two weeks, and a traditional firm in three to six. Notice how many of the rows depend on the company. The appraiser's analysis is often the shortest part of the wait.

Can you do a 409A valuation yourself?

Technically, yes: Section 409A requires only a reasonable valuation method. But a do-it-yourself value gets no safe harbor presumption unless it meets the illiquid start-up rule, which requires a written valuation by someone with significant relevant experience, at a company under ten years old with no sale or IPO expected soon. Otherwise, the company must prove the value was reasonable.

The Treasury regulations (Section 1.409A-1(b)(5)(iv)(B)) describe three valuation methods that are presumed reasonable. The IRS can overturn a value set under one of them only by showing that the method or its application was grossly unreasonable. Our 409A safe harbor guide covers each in detail:

• Independent appraisal: a valuation by a qualified independent appraiser, as of a date no more than 12 months before the grant. This is the method almost every venture-backed startup uses.
• Binding formula price: a formula used consistently for all purchases and sales of the stock, typically under a buy-sell agreement. Rarely practical for a venture-backed company.
• Illiquid start-up valuation: a reasonable written valuation by a person with significant knowledge and experience in valuation or a closely related field, generally at least five years. It is available only if the company has been in business for less than ten years, has no publicly traded equity, and does not reasonably expect a change in control within 90 days or an IPO within 180 days. The stock must also not be subject to a put, call or other purchase obligation, other than a right of first refusal or a lapse restriction.

So the real question behind "how to do a 409A valuation" yourself is whether anyone on your team has the experience to qualify and the time to build a defensible analysis: allocating value across preferred and common, applying a marketability discount, and documenting every assumption. For most companies the honest answer is no. A founder's spreadsheet also gives up the burden-of-proof advantage that makes the safe harbor worth having. Our guide to DIY 409A valuation risks works through the trade-off. If you just want to understand how to do a 409A valuation, so you can read the report you buy, our 409A valuation methodology guide explains the approaches.

The stakes fall mainly on employees. If an option's exercise price turns out to be below fair market value, the option is treated as deferred compensation that fails Section 409A. The holder can owe income tax on the vested spread before exercise, plus a 20% additional federal tax and premium interest, as explained in our guide to 409A valuation penalties. The company faces withholding and reporting failures of its own.

The Bottom Line on How to Get a 409A Valuation

How to get a 409A valuation comes down to five decisions made in order: buy for your actual stage, compare quotes on what they include, send a clean data package with a deliberate valuation date, review the draft for facts rather than for a target price, and have the board adopt the value before any grant is approved. Get those right and the appraiser's part is usually the quickest piece.

Then treat the valuation as something you maintain. Track the 12-month expiry, check for material events before every grant, and keep the report with the board resolution and grant documents. A company that does this rarely has to rush a 409A, and never has to explain a grant made without one.

Prices and timelines in this article are typical 2026 ranges and vary by provider and company. This article is general information about obtaining a valuation for Section 409A purposes, not legal, tax or accounting advice. Whether a particular valuation qualifies for a safe harbor presumption, and how to price and document a particular grant, depends on the company's specific facts; consult your own legal and tax advisors before granting equity.