What is 409A Valuation?
IRC Section 409A valuation is a fair market value assessment of common stock required by the Internal Revenue Service (IRS) for companies granting stock options to employees. This valuation provides "safe harbor" protection from tax penalties and ensures compliance with US tax regulations.
For Indian startups with US entities, Delaware C-Corps, or US-based employees receiving stock options, 409A valuations are mandatory to avoid significant tax penalties under Section 409A of the Internal Revenue Code.
Who Needs 409A Valuation?
Indian Startups with US Entity
Startups with Delaware C-Corps or other US entities issuing stock options
US-Based Employees
Companies with employees or consultants based in the United States
Cross-Border Structures
Companies with complex cross-border holding structures and flip transactions
Stock Option Plans
Companies issuing employee stock options or equity compensation
Pre-IPO Companies
Private companies preparing for public offerings or acquisitions
VC-Backed Startups
Venture capital backed companies with US investor requirements
Our 409A Valuation Process
Document Collection
Gather financial statements, cap table, board resolutions, and recent transactions
Valuation Analysis
Apply DCF, market multiple, and other relevant valuation methodologies
Fair Value Determination
Calculate fair market value of common stock and preferred equity
Report Delivery
Comprehensive 409A valuation report with detailed methodology and assumptions
409A Compliance Benefits
For Companies
- Safe harbor protection from IRS audits
- Avoid penalty taxes on stock options
- Accurate strike price determination
- Investor confidence and due diligence
For Employees
- Tax penalty protection
- Deferred taxation on options
- Optimal exercise timing
- Compliant equity compensation
409A Valuation Pricing
Initial 409A
- • First-time valuation
- • Comprehensive analysis
- • 7-10 day delivery
- • IRS compliant report
Annual Update
- • Annual refresh
- • Updated assumptions
- • 5-7 day delivery
- • Consistent methodology
Event-Driven
- • Financing rounds
- • Material events
- • 7-10 day delivery
- • Updated fair value
Need 409A Valuation Services?
Get professional 409A valuation from India's leading IBBI registered valuer
Serving startups across India with US entities and cross-border structures