If your company is considering an IPO, it’s important to select a valuation professional with significant experience valuing pre-IPO companies for 409A.
In many instances, your financial statement auditor can provide a referral. Selecting a professional who doesn’t have proper experience or who uses improper methodologies can result in significant additional audit costs or a challenge from the SEC.
Before selecting a valuation professional, companies can benefit from taking the following steps:
Schedule a meeting with the valuation professional and your auditor, including their valuation specialists.
Discuss the methodologies the valuation professional expects to apply and obtain auditor agreement.
Establish an agreement that the valuation professional will reconnect with you and your auditors if the agreed-upon methodologies deviate from the original plan.
Request a draft of the valuation so your auditors can review it and provide questions or feedback before the valuation is finalized.