What data will I need to provide to complete a 409A valuation?
Takeaway: To complete a 409A valuation, you must provide your valuation firm with a comprehensive package of corporate, financial, and strategic documents that allows them to build a complete and defensible picture of your company's value.
The 409A valuation process is not a passive event. It requires you, the founder, to assemble and provide a detailed set of information about your company to your chosen independent valuation firm. The quality and completeness of the data you provide will have a direct impact on the speed, accuracy, and defensibility of the final valuation report.
Preparing this data package ahead of time will make the entire process smoother and more efficient. While the specific request list will vary slightly from firm to firm, every 409A valuation will require a core set of documents that fall into three main categories.
1. Corporate & Legal Documents
This information establishes the legal and ownership structure of your company.
Certificate of Incorporation: To confirm the company's formation and the total number of authorized shares.
Bylaws: To allow the valuation firm to understand the company's governance structure.
A Complete and Current Capitalization (Cap) Table: This is one of the most important documents. It must list all outstanding shares, all granted options, and the remaining shares in the option pool.
All Prior Financing Documents: This includes any SAFEs, convertible notes, or preferred stock purchase agreements from previous financing rounds. The terms of these agreements are a key input into the valuation model.
2. Financial Information
This data provides a picture of the company's historical performance and financial health.
Historical Financial Statements: Typically, your income statement, balance sheet, and cash flow statement for the past 1-3 years, if available.
Future Financial Projections: Your detailed financial model, showing your revenue and expense projections for the next 3-5 years. The assumptions behind these projections must be credible and well-reasoned.
Any Recent Offers to Purchase the Company: If you have received any recent, bona fide offers to be acquired, this is a critical data point that must be disclosed.
3. Business & Strategic Information
This qualitative information gives the valuation analyst the context they need to understand your business and its position in the market.
An Investor Pitch Deck: This is often the best summary of your company's mission, technology, team, and market opportunity.
A Description of the Business: A narrative description of what your company does, the problem it solves, and its key products or services.
Information on Your Competitors: A list of the key public and private companies that you compete with. The valuation analyst will use this information to find comparable companies ("comps") to help benchmark your valuation.
Assembling this data package may seem like a significant amount of work, but it is an essential part of the process. By providing your valuation firm with a complete and well-organized set of information, you enable them to produce a thorough, accurate, and highly defensible 409A report that will protect your company and your employees from adverse tax consequences.
Disclaimer: This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Reading or relying on this content does not create an attorney–client relationship. Every startup’s situation is unique, and you should consult qualified legal or tax professionals before making decisions that may affect your business.