Txn Capital LLC

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Transaction Capital LLC is a “ONE STOP SOLUTION” for all sorts of Valuation requirements such as 409A Valuation, SBA 7a Valuation, Purchase Price Allocation, Intangible Valuation, Option Valuation, Convertible Valuation, Litigation Valuation, Financial Modelling, Business Plan, Feasibility study, Market Research, Go to Market Strategy and Legal Consultancy.

2055, Limestone RD STE 200-C, Wilmington DE 19808

+91-9097572443

 info@txncapitalllc.com

Saurobh Barick

Saurobh Barick

9:00 am - 6:00 pm

Best 409A Valuation Services (FAQ)

409A Valuation FAQ

- What is a 409A Valuation?

A 409A valuation is an independent assessment of your company’s common stock, required by the IRS to issue stock options. This valuation ensures compliance with Fair Market Value regulations and avoids potential tax penalties.

- Why does my company need a 409A valuation?

If your company plans to offer stock options or other equity incentives to employees, a 409A valuation is necessary to comply with IRS regulations. It helps avoid penalties associated with undervalued stock options and ensures proper tax treatment for both the company and its employees.

- Why can’t I use my last funding price?

Funding prices are based on preferred shares with special rights and often overvalue common stock. A 409A valuation reflects the fair market value from a common shareholder’s perspective, making stock options more attractive for employees.

- Can I conduct a 409A valuation in-house?

While it is possible for companies to estimate their fair market value internally, it is highly recommended to engage an independent third-party valuation firm. This provides safe harbor protections and audit support in case of IRS inquiries.

- What are the risks of skipping a 409A Valuation?

Non-compliance with IRS rules can lead to penalties and immediate tax obligations for employees. Furthermore, lacking a 409A valuation can deter investors or delay mergers and acquisitions.

- What information is needed for a 409A valuation?

Key information required includes:

  • Company financial statements
  • Capitalization table (cap table)
  • Company Profile
  • Captable, if any
  • Fundraising history
  • Desired valuation date
  • Financial projection, if any
  • Other relevant data impacting the company’s value

- Can I use automated tools or my cap table provider for a 409A Valuation?

Automated tools often lack accuracy, overvaluing common stock and risking audit rejection. A proper 409A valuation requires a deep analysis of your business and market, which goes beyond just cap table data.

- How often should I get a 409A Valuation?

A 409A valuation is valid for 12 months or until a significant event, like a new funding round, which could impact your company’s valuation.

- Why choose Transaction Capital LLC?

We provide compliant, accurate, and audit-ready 409A valuations at competitive rates, backed by experienced analysts with top industry credentials. Our detailed reports meet AICPA standards, providing peace of mind for audits and financial planning.

- What are the consequences of not complying with 409A regulations?

Non-compliance with 409A can result in severe penalties, including:

  • Immediate taxation of deferred compensation
  • A 20% excise tax on the amount deferred
  • Additional state-level penalties and taxes

- Who performs the 409A valuation at Transaction Capital LLC?

Our team consists of experienced valuation analysts who hold certifications such as ABV, ASA, MRICS and CVA. They have extensive experience working with companies across various sectors to ensure accurate and compliant valuations.

- How can I get started with a 409A valuation from Transaction Capital LLC?

To initiate the process, simply contact us through our website, email or call our office. We will guide you through the necessary steps and gather the required information for your valuation.

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