409A Valuation for Stock Buybacks & Tender Offers: How They Affect Common FMV

Stock buybacks and tender offers are no longer reserved for public companies. Growth-stage startups and venture-backed businesses now run them regularly. They give employees and early investors real liquidity in an otherwise illiquid market.

But here is what most founders miss: a buyback or tender offer is not just a financial event. It is a valuation event.

When your company purchases its own shares at a stated price, that transaction creates documented evidence of common stock value. The IRS, your auditors, and your 409A appraiser will weigh that price directly when determining the fair market value (FMV) of your common stock. In most cases, you will need a new 409A valuation before issuing any more stock options.

This guide explains how stock buybacks and tender offers affect your 409A valuation, what triggers a mandatory refresh, and how to keep your company and employees on the right side of compliance.

At Transaction Capital LLC, our certified appraisers (ABV, ASA, CVA, MRICS) have delivered thousands of 409A reports across complex post-tender and secondary transaction scenarios – with flat-fee pricing from $500 and delivery in 3 to 5 business days.

Key Takeaways

• A company-sponsored tender offer almost always qualifies as a material event under IRC Section 409A, requiring a new independent appraisal before your next option grant.
  
• The tender offer price is powerful FMV evidence, but it is not automatically the 409A FMV. A credentialed appraiser must still apply proper methodology including equity allocation and DLOM.
  
• Tender offers typically compress the Discount for Lack of Marketability because they demonstrate real, documented liquidity for common shareholders.
  
• Granting options between a tender offer announcement and a completed new 409A creates a serious compliance gray zone with direct IRS penalty exposure for employees.
  
• Private company buybacks and tender offers are governed by Regulation 14E. The Wellman 8-factor test determines whether a buyback legally qualifies as a tender offer.
  
• Tender offer pricing for private companies is typically set at or near the current 409A FMV, but IPO proximity and shareholder sentiment significantly influence final pricing.
  
• A post-tender 409A from a qualified independent appraiser provides IRS Safe Harbor protection and shifts the burden of proof away from the company.
  

What Is a Stock Buyback for a Private Company?

A stock buyback is when a company purchases its own shares from existing shareholders. For private companies, these transactions typically occur through one of three structures:

• Privately negotiated deals with individual shareholders
  
• Formal tender offers opened to a broader group of shareholders at a fixed price
  
• Structured repurchase programs triggered by employment termination or vesting schedules

Unlike public company buybacks, private company repurchases involve no observable market price. The board sets the price. That is exactly why the 409A valuation matters so much here. It establishes the documented FMV that the buyback price will be measured against – both by auditors and by the IRS.

Private company buybacks serve real strategic purposes. They provide liquidity for early employees and investors who have no public market to sell into. They support hiring by showing candidates that equity compensation can convert to actual cash. And for founders, regular liquidity programs signal confidence in the company’s long-term trajectory.

But every buyback creates a price record. That record does not disappear after the transaction closes. The IRS and your auditors will reference it when evaluating the reasonableness of your 409A reports going forward.

What Is a Tender Offer – And How Is It Different?

A tender offer is a formal, organized invitation to shareholders to sell their shares at a fixed price during a defined window. The company – or a third-party investor group – sets the price, defines eligibility, and holds the offer open for a minimum period.

For private companies, tender offers are most used to:

• Run broad employee liquidity events before an IPO
  
• Bring in new investors who take the tendered shares onto their books
  
• Reduce the cap table complexity ahead of a public market transition

The legal distinction between a buyback and a tender offer matter enormously for compliance. U.S. securities law does not provide a bright-line definition of what constitutes a tender offer. Courts apply for the Wellman v. Dickinson 8-factor test to make that determination.

The Wellman 8-Factor Test:

1. Active and widespread solicitation of shareholders
   
2. Solicitation for a substantial percentage of the company’s shares
   
3. A premium offered over the prevailing market price
   
4. Fixed and non-negotiable terms
   
5. The offer is conditioned on tendering a minimum number of shares
   
6. The offer is open for a limited period only
   
7. Offerees face pressure to sell before the deadline
   
8. Public announcement either precedes or follows share accumulation
   

Why Private Companies Are Using Buybacks and Tender Offers More Often

Stock buybacks and tender offers were once almost exclusively a public company tool. That has changed significantly over the last several years.

Several situations commonly push private companies toward buybacks or tender offers:

Shareholder count and cap table complexity – Later-stage companies often accumulate a large number of shareholders through successive funding rounds. To facilitate new late-stage investments or prepare an IPO, companies may benefit from reducing that count – particularly among smaller shareholders – and simplifying the cap table. Later-stage investors often want a clean capital structure to ensure their rights are clear, and a company with fewer shareholders and simplified classes of securities faces fewer complications when it eventually pursues a public offering.

Employee and early investor liquidity – Employees who have held options and shares for several years want real returns before an IPO. Founders and early investors may want to reduce concentration. Buybacks and tender offers address both needs while keeping the company private.

Undervaluation or excess cash – A board that believes the company’s common stock is undervalued – or that cash is better deployed returning value to shareholders – may pursue a buyback as a capital allocation decision.

High-profile examples from 2024 to 2026 include Stripe at a reported $159 billion valuation, Databricks at $62 billion, and SpaceX running structured tender offers roughly every six months. These transactions have standardized the playbook and made buybacks a mainstream expectation at late-stage private companies.

Buybacks vs. Tender Offers: Which Structure Should You Choose?

Decision Factor	Privately Negotiated Repurchase	Formal Tender Offer
Best For	Repurchasing from one or a small number of specific shareholders – such as a departing founder or early angel investor	Offering broad liquidity to employees and investors across the cap table
Company Goals	Targeted share reduction; clean exit for a specific party without disrupting the wider cap table	Structured, company-wide liquidity event with defined eligibility and participation rules
Investor Preferences	Preferred by investors who want greater control over who exits and when	Preferred by late-stage investors and LPs who require documented liquidity at a specific price
Regulatory Exposure	Lower regulatory burden if Wellman 8-factor threshold is not triggered; falls outside Regulation 14E if structured carefully	Regulation 14E applies in full – including anti-fraud provisions, timing rules, and prompt payment obligations
SEC Classification Risk	If buyback activity hits the Wellman 8-factor threshold, it is reclassified as a tender offer regardless of intent	Classified as a tender offer from the outset – no reclassification risk if structured correctly
Offer Period Required	No minimum offer period	Minimum 20 business days under Regulation 14E
Documentation Required	Term sheet and repurchase agreement; less formal process	Full offer materials, eligibility schedules, and formal offer to purchase documentation
Financing and Timing	Faster to execute; fewer internal resources required	More process-intensive; requires capital readiness, legal counsel, and participant management
409A Impact	May or may not be a material event depending on size and price relative to current FMV	Almost always a material event – new 409A required before the next option grant
DLOM Effect	Modest compression if transaction is small relative to cap table	Significant compression – demonstrates documented liquidity for common shareholders

Fixed-Price vs. Dutch Auction Tender Offer: What Private Companies Need to Know

Feature	Fixed-Price Tender Offer	Dutch Auction Tender Offer
How Price Is Set	Single price set by the company in advance	Price range announced; shareholders submit minimum acceptable price
How Shares Are Accepted	All at stated price; pro-rata if oversubscribed	All at the lowest clearing price that meets the share target
Cost to the Company	Higher – premium required to drive participation	Lower – market sets the clearing price
Shareholder Experience	Simple – one price, one decision	More complex – shareholders choose price within the range
Oversubscription	Pro-rata acceptance	Shares above clearing price are returned
Undersubscription	Extend offer or accept fewer shares	Cancel offer or pay maximum stated price
409A FMV Signal	Clean single price; straightforward appraiser reconciliation	Clearing price plus bid range informs FMV conclusion
Material Event Trigger	Yes – new 409A required before next option grant	Yes – same obligation applies
Best For	Simplicity and clean compliance documentation	Cost efficiency with a market-driven price mechanism

Legal Compliance Before You Run a Buyback or Tender Offer

Before any share of repurchase or tender offer is structured, private company boards must review several layers of legal constraints. Skipping this step is one of the most common – and most costly – mistakes in private company transactions.

1. Review your governing documents – A company’s charter, bylaws, shareholder agreements, and investor rights agreements may limit or expressly prohibit the acquisition of its own stock. These documents should be reviewed by legal counsel before any buyback or tender offer program is announced. Some companies discover that investor rights agreements require consent or waiver from certain security holders before a repurchase can proceed.

2. Check for rights of first refusal – Many investor rights agreements and shareholder agreements include right-of-first refusal (ROFR) provisions. A tender offer – even one organized by the company itself – can trigger ROFR rights for existing shareholders. If not addressed in advance, these provisions can derail a transaction mid-process or expose the company to breach claims.

3. Consider state corporation law – Share repurchases are treated under state law as a return of capital, similar to a cash dividend. Most states impose specific limitations on a company’s ability to make such distributions, typically requiring that the company be solvent and have sufficient surplus or net assets after the repurchase. Delaware, where most venture-backed companies are incorporated, has specific statutory solvency and surplus requirements that must be satisfied before any repurchase is lawful.

4. Determine the classification under federal securities law – As discussed, determining whether planned share repurchases have risen to the level of a tender offer under federal law is a critical step before proceeding. The Wellman 8-factor test is the primary tool for this analysis. If the planned repurchase qualifies as a tender offer, Regulation 14E disclosure, timing, and anti-fraud obligations apply automatically.

The conclusion of this legal review must be documented. That documentation, together with a current and credentialed 409A valuation, forms the compliance foundation for any private company buyback or tender offer program.

How Stock Buybacks and Tender Offers Affect Common FMV

This is where private company boards are often caught unprepared. A tender offer sets a documented transaction price for your common stock. Once that price exists, it becomes the most powerful piece of market evidence available to your 409A appraiser.

Here is the core reason: The 409A framework requires appraisers to determine FMV under a hypothetical willing buyer/willing seller standard. An actual arm-length transaction in the company’s common stock – at a real price, with real buyers – is the strongest possible evidence of what a willing buyer would pay. A tender offer at a stated per-share price is exactly that.

Appraisers use the tender price in two distinct ways depending on the company’s stage:

Calibration check: The OPM Backsolve or PWERM result is compared against the tender price. If they diverge significantly, the appraiser must document why that divergence is reasonable.

Primary FMV anchor: For late-stage companies, the tender price often becomes the dominant input. The appraiser applies a modest discount to reflect the difference between the tender audience (which may be common holders only) and the broader 409A FMV definition.

A tender price of $15 per share does not automatically mean the 409A FMV is $15 per share. The appraiser still runs equity allocation across all share classes and applies to the appropriate DLOM. But if the tender price significantly exceeds the prior 409A result, the new FMV will move upward. The question is how much – and that depends on proper methodology.

The Tender Offer Price Is Not Your 409A FMV

This is one of the most consequential misconceptions in private company equity management.

Many founders assume: we ran a tender offer at $20 per share, so our 409A FMV is $20 per share. That logic is wrong – and it creates direct IRS exposure.

The IRS Safe Harbor requires an independent appraisal that applies to a recognized, documented methodology. Simply adopting the tender price without a formal 409A report does not satisfy Safe Harbor requirements. No safe harbor means no burden-of-proof protection in an audit.

There is a second problem. When the board approves a tender offer at a specific price, that approval creates a documented record the IRS can access in any future examination. If the company, then grants options at a significantly lower FMV – without commissioning a new appraisal – auditors will ask pointed questions about whether the board process was reasonable.

The defensible path: obtain a new 409A from a credentialed appraiser promptly after the tender closes. The appraiser reviews the tender price, weighs it appropriately against the OPM or PWERM result, and arrives at a documented FMV that integrates the new market evidence while satisfying Safe Harbor requirements.

Get a post-tender 409A Valuation – Flat Fee, 3 to 5 Business Days

How Tender Offers Compress the DLOM

The Discount for Lack of Marketability reflects the illiquidity of private company shares. Because private shares cannot be freely sold, appraisers apply for a discount – typically 20 to 40 percent – to the marketable minority value of common stock.

A tender offer changes this calculation directly.

When a company-organized tender offer provides real exit optionality for common shareholders, the historical assumption – that employees must hold indefinitely until IPO or acquisition – is no longer accurate. Shareholders had a real price, a real buyer, and a real exit window. That documented liquidity compresses the DLOM.

Appraisers also use the relationship between the tender transaction price and the estimated enterprise value to calibrate the DLOM directly. If common shares tendered at a 12 percent discount to the preferred-equivalent value, that data point supports a DLOM in that range for the next 409A cycle.

At late stage – when a company has established secondary markets and recurring tender offer programs – the DLOM may compress to 15 to 25 percent, compared with the 30 to 40 percent applied at early stages. This compression is analytically appropriate, but it carries a real consequence: the FMV of common stock rises closer to the preferred stock price.

The practical result is that post-tender option grants will have higher strike prices than pre-tender grants. That is the compliance reality. Failing to account for it by using a stale 409A puts both the company and its employees at serious risk.

Is a Tender Offer a Material Event Under IRC Section 409A?

Yes – in almost every case involving a company-sponsored transaction.

Under IRC Section 409A, a material event is any development that a reasonable professional would expect to affect the fair market value of common stock. A formal buyback at a fixed per-share price is exactly that. The IRS expects companies to commission a new appraisal before issuing any additional option of grants.

Other secondary transactions may also qualify depending on their scale and how they were structured:

• Large-volume transactions involving a meaningful percentage of fully diluted shares
  
• Secondary sales at prices materially above the current 409A FMV
  
• Board-approved secondary sales facilitated with company involvement or logistics

Smaller peer-to-peer secondary transactions – for example, one former employee selling shares to one investor – are softer triggers. Boards should evaluate these individually. A fresh 409A may not be required if the transaction is small relative to the cap table, and the price is consistent with the current FMV.

When the company organizes the transaction, the material event standard almost always applies. When in doubt, consult your 409A provider and legal counsel before proceeding with any new option of grants.

The Compliance Risk of Granting Options Between a Tender Offer and a New 409A

This is the highest-risk window for private companies. Consider this scenario:

• March: The company runs a tender offer at $18 per share.
  
• Prior to September: The last 409A set a common FMV at $10 per share.
  
• April: The company wants to issue options for new hires before the new 409A is ready. It uses the old $10 FMV.

These options are in a compliance gray zone. The IRS can argue that the company possessed material information – the tender price – that rendered the $10 FMV stale on the grant date. If the strike price was $10 when the tender demonstrated a value closer to $18, those options may be deemed to have been granted below FMV.

The consequences are severe for employees: immediate income recognition on the spread between the strike price and FMV, plus the 20 percent IRS penalty on that amount, plus interest. This is not a theoretical risk. It is the exact fact pattern IRS examiners are trained to identify.

The defensible practice: pause all option grants the moment a tender offer is announced. Commission a new 409A immediately after the tender closes. Resume option grants only after the new FMV is board-approved.

A 2 to 4-week pause in option grants is manageable. A compliance failure affecting dozens of employees is not.

How PWERM Changes When a Tender Offer Is in Play

The Probability-Weighted Expected Return Method models multiple exit scenarios and assigns probability weights to each. Standard scenarios include IPO, strategic acquisition, continued operation, and dissolution.

A tender offer meaningfully shifts this weight structure.

When a company runs an organized buyback – especially at a significant per-share price with institutional investor backing – it signals forward momentum. Boards and appraisers typically increase the probability of weight assigned to the IPO or acquisition scenario. A 10-percentage-point shift in IPO probability can move the resulting common FMV by 5 to 15 percent.

The tender price also serves as a direct input for calibrating scenario values. If the tender occurred at $18 per share in a late-stage company where an IPO is 18 months out, the appraiser references that transaction when setting assumptions within the IPO scenario of the PWERM model.

This is one reason post-tender 409A reports are more complex than standard annual refreshes. The appraiser must integrate the tender price evidence, adjust scenario probability weights, and maintain full methodological defensibility – all in a documented format that satisfies IRS Safe Harbor requirements.

A software platform cannot perform this analysis. Only a credentialed expert can.

Pricing a Private Company Tender Offer: What the Rules Say

Public company tender offers are typically priced at a premium to the market price to encourage participation. Private company tenders offer work differently.

Because the primary purpose is usually liquidity – not a full-company sale – the pricing is often set at or near the current fair market value. That FMV is typically derived from the most recent 409A valuation or the most recent capital-raising transaction.

Several factors govern how that price is determined in practice:

IPO proximity: If the tender offer price is significantly below the anticipated IPO price, and the two events are close in time, affected shareholders may raise legal and reputational objections. Courts take notice when employees receive far less in a tender than they would have received through a near-term public offering.

QSBS eligibility and holding periods: Shareholders holding QSBS-eligible shares under IRC Section 1202 can exclude up to 100 percent of capital gains on the first $10 million gain – but only after a 5-year holding period. Tendering before that threshold forfeits the exclusion entirely. Proper pricing and advance notice allow shareholders to make informed decisions.

Existing shareholder agreements: Right-of-first-refusal provisions, co-sale agreements, and lock-up restrictions all affect who can participate under what terms. These must be reviewed before the tender offer is structured.

Participation caps: Most private company tender offers limit individual participation – for example, shareholders may tender no more than 25 percent of their vested eligible shares. This controls total cash outlay and prevents a wholesale cap-table reset.

SEC and Federal Rules That Govern Private Company Buybacks

Private companies running tender offers are not exempt from securities law. Regulation 14E under the Exchange Act applies to all tender offers – public and private issuers alike.

Core Regulation 14E requirements:

• The offer must remain open for at least 20 business days
  
• Shareholders must receive at least 10 business days’ notice of any material change to the offer terms
  
• The issuer must promptly pay for all tendered shares after the offer period expires
  
• Anti-fraud provisions prohibit any materially false or misleading statements in tender offer materials

Rule 13e-4 applies specifically to issuer tender offers by registered public companies. Private companies are not subject to 13e-4 directly, but the analogous obligations under Regulation 14E still apply. Private company transactions that result in the issuer going private may implicate Rule 13e-3 as well.

Rule 10b-18 provides a safe harbor from manipulation claims for open market repurchases – but this protection is not available for tender offers. Companies running formal tender offers cannot rely on Rule 10b-18.

For private company boards, the most important compliance question is documentation. A thorough board process – with a current, credentialed 409A as the FMV foundation – is the first line of defense in any regulatory examination.

Tax Implications for Employees Selling into a Buyback

Employees who sell shares in a private company tender offer different tax outcomes depending on what they hold and how long they have held it.

1. ISO holders: Incentive Stock Options held for more than 2 years from the grant date and 1 year from the exercise date to qualify for long-term capital gains treatment. Tendering before meeting both holding periods triggers ordinary income tax on the spread between strike price and sale price – not the preferred capital gains rate.

2. NSO holders: Non-Qualified Stock Options generate ordinary income at exercise equal to the spread between the strike price and the FMV at exercise. Any additional gain from the exercise date to the tender price is a capital gain, with the character determined by the post-exercise holding period.

3. RSU holders: Restricted Stock Units are taxed as ordinary income at vesting, based on FMV at that date. Gains above the vesting FMV are capital gains, with holding period beginning at vesting.

4. QSBS considerations: Shareholders holding Qualified Small Business Stock under IRC Section 1202 can exclude up to 100 percent of federal capital gains – capped at the greater of $10 million or 10x the taxpayer’s adjusted basis – if the 5-year holding period is satisfied. Tendering before crossing the 5-year mark permanently forfeits this exclusion.

Employees should consult a tax advisor before accepting any tender offer. The decision to sell – and the timing – can have an irreversible impact on net after-tax proceeds.

Stock Buyback vs. Tender Offer: Key Differences briefly

Feature	Open Market Buyback	Formal Tender Offer
Pricing	Negotiated or prevailing FMV	Fixed price for all eligible participants
Solicitation	Not broadly solicited	Formal, widespread solicitation
Regulation 14E	May not apply	Almost always applies
409A Impact	May be a soft trigger	Almost always a material event
DLOM Impact	Modest compression	Significant compression
IRS documentation	Strongly recommended	Required
Board approval	Required	Required with formal documented process
Wellman test factors	Sometimes triggered	Usually, all 8 factors triggered
Employee participation	Case by case	Defined eligibility and sell-cap per holder
QSBS considerations	Applies to eligible holders	Applies – timing is critical

When to Commission a New 409A After a Buyback or Tender Offer

Timing your 409A refresh is not optional after a material event. Here is the standard operating framework:

Upon tender offer announcement: Begin the 409A process immediately. Contact your provider before the offer closes. You want the appraisal ready as quickly as possible after the transaction settles.

Within 30 to 60 days of tender close: The new 409A should be completed and board approved. This is the standard window most institutional investors and audit firms expect.

Before the next option grants without exception: Do not issue options on a stale FMV. There is no compliant workaround.

After large peer-to-peer secondary transactions: Evaluate the situation with your appraiser and legal counsel. A fresh 409A may be the prudent step depending on transaction volume and pricing relative to the current report.

Why Choose Transaction Capital LLC for Your Post-Tender 409A Valuation?

• Expert-Led Certified Professionals – Every post-tender 409A report is signed by an ABV, ASA, CVA, or MRICS credentialed appraiser – the designations of IRS agents and Big 4 auditors verify first.
  
• Transparent Flat-Fee Pricing – Starting at $500. No billable hours. No surprises. Your fee is confirmed before any work begins.
  
• Complete Post-Valuation Support – Audit defense, IRS inquiry responses, and investor due diligence assistance included in every engagement at no additional charge.
  
• Trusted by Investors, Attorneys, and Courts
  
• Our independent reports have been accepted by Big 4 audit firms, venture capital investors, corporate law firms, and US courts.

Elite Leadership

15+ years of investment banking and valuation experience in every senior engagement. Your appraiser is accountable from first call to final report.

Transaction Capital LLC delivers post-tender 409A valuations in 3 to 5 business days for standard engagements. Every report is signed by an ABV, ASA, CVA, or MRICS credentialed appraiser. And with our Pay After Draft Review guarantee, you review the complete report – including tender price reconciliation, equity allocation, and FMV conclusion – before paying a single dollar.

Conclusion

Stock buybacks and tender offers give private company shareholders something genuinely valuable: real liquidity in a market that rarely offers any. But every buyback creates a price record – and that record changes how your 409A valuation must be structured.

The tender offer price is not just a transaction figure. It is evidence of fair market value. It compresses the DLOM, shifts PWERM probability weights, and almost always triggers the need for a new 409A before your next option grants. Treating it as anything less puts your company and your employees at direct IRS risk.

The right sequence is straightforward: complete the tender, immediately commission a new 409A from a credentialed independent appraiser, and hold all option grants until the new FMV is board-approved.

Transaction Capital LLC’s ABV, ASA, CVA, and MRICS certified appraisers have completed 2,500+ valuations across 50+ industries, including post-tender and complex secondary transaction scenarios. Our flat-fee pricing starts at $500. Turnaround is 3 to 5 business days. You pay only after reviewing your complete draft report.

Get Your Post-Tender 409A Valuation Today – Speak with a Certified Appraiser

Frequently Asked Questions

1. Does every stock buyback require a new 409A valuation?

Not every buyback automatically triggers a mandatory 409A refresh. The analysis depends on whether the transaction qualifies as a material event under IRC Section 409A. Company-organized tender offers almost always do. Smaller peer-to-peer secondary transactions between individual shareholders may not, but boards should evaluate each case with their appraiser before issuing any new option of grants.

2. Can we use the tender offer price as the 409A FMV for our next option grants?

No. The tender offer price is strong evidence of FMV, but it is not a substitute for an independent appraisal. Adopting the tender price without a credentialed 409A report does not satisfy IRS Safe Harbor requirements. Options granted at that price without a supporting appraisal carry full penalty exposure.

3. How soon after a tender offer do we need a new 409A valuation?

There is no fixed statutory deadline, but the standard practice is 30 to 60 days after the tender’s offer closes. No new option grants should be issued until the new 409A is board-approved. Starting the process before the tender closes shortens that window considerably.

4. Does a tender offer always compress the DLOM?

Generally, yes. A tender offer demonstrates that liquidity is available for common shareholders, which compresses the DLOM relative to a scenario where no secondary liquidity exists. The degree of compression depends on the size of the tender, the price relative to preferred stock, and the company’s proximity to a liquidity event.

5. What happens to employees who receive options between a tender offer and a new 409A?

Those options are in a compliance gray zone. If the strike price set using the old FMV is below the FMV as evidenced by the tender price, those options may be characterized as nonqualified deferred compensation under Section 409A. The consequences for each affected employee: immediate income recognition on the entire spread and a 20 percent IRS penalty on that amount.

6. What SEC rules apply to a private company tender offer?

Regulation 14E applies to all tender offers, including those run by private companies. It requires a minimum 20-business-day offer period, 10-business-day notice of material changes, prompt payment after the offer closes, and full anti-fraud compliance. Private companies running tender offers cannot rely on the Rule 10b-18 safe harbor, which applies only to open market repurchases.

7. Does Transaction Capital LLC handle post-tender 409A valuations?

Yes. Transaction Capital LLC provides 409A valuations specifically for companies that have recently completed or announced tender offers or secondary transactions. Every report is prepared and signed by ABV, ASA, CVA, or MRICS for credentialed appraisers. Engagements are delivered in 3 to 5 business days, starting at a $500 flat fee, with a Pay After Draft Review guarantee.

8. What is the difference between a fixed-price and Dutch auction tender offer, and which is better for 409A purposes?

A fixed-price tender offer sets a single stated price for all eligible shareholders. A Dutch auction sets a price range and lets shareholders submit minimum acceptable prices within that range; the company pays the lowest clearing price that achieves its share target. For 409A purposes, both structures create a documented transaction price your appraiser must incorporate. Fixed price offers to produce a cleaner single data point. Dutch auctions produce a clearing price that serves the same function, though the full range of bids also informs the appraiser’s analysis. Both structures trigger the same material event obligation under IRC Section 409A.

9. Can investor rights agreements or shareholder agreements block our planned buyback or tender offer?

Yes. Many investor rights agreements limit or expressly prohibit company share repurchases or require consent from specific security holders before a buyback can proceed. Rights of first refusal are particularly common – a tender offer can trigger ROFR provisions that, if not addressed in advance, can halt the transaction mid-process. State corporation law also imposes solvency and surplus requirements on share repurchases. All governing documents must be reviewed by legal counsel before announcing any buyback or tender offer.

10. What documents does Transaction Capital LLC need to complete a post-tender 409A valuation?

We typically require the executed tender offer documents including the stated per-share price and participation summary, the updated cap table, three years of financial statements and recent interim financials, the most recent prior 409A report, current funding documents, and key corporate agreements. A tailored checklist is provided at the start of every engagement. Standard post-tender engagements are delivered in 3 to 5 business days. You receive your quote before any work begins and pay only after reviewing your complete draft report.

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