Audit-ready 409A valuations
Get prepared to issue equity with a 409a valuation and accurate cap table, all in one.
Trusted by founders and companies from seed → scale
"As a startup, we understand and appreciate the importance of accurate and timely 409A valuations. Using Pulley’s valuation product, our dedicated team of valuation specialists can ensure valuations are prepared quickly and seamlessly, with minimal back and forth."
Audit-ready 409A
valuations in half the time
Audit-Ready Reports
Our valuation experts take the time to understand your business to ensure it is compliant with the highest standards of review - including audit firms, IRS, and SEC.
You can trust your valuation with us. We offer all companies free lifetime audit review support at no additional cost.
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Cap Table & 409A
An up-to-date cap table is required for your 409A. Our software tools help you collect the data you need for your 409A valuation so you can save valuable time.
Set your 409A on auto-pilot so you can focus your efforts on running your business and attracting top talent.
Team of Experts
Be wary of low-cost valuation firms. Some 409A valuation firms use automated statistical models to provide fast, low-cost reports. This comes with two risks:
- Overvalued shares - Low-cost providers reduce compliance risk by over-pricing shares by almost 30–50%. This can de-motivate employees and defeats the purpose of granting equity to attract great talent.
- Due diligence – Reports that are fully automated don’t accurately reflect the value of your business as no due diligence is performed when preparing the valuation. Pulley’s in-house valuation experts undergo a thorough investigation of your business and reports are reviewed by senior staff before they are delivered.
A 409A analyst is like a home appraiser - pick someone who will research your business to accurately assess its value. Our in-house valuation team of experts will understand your business to return a fair and defensible 409A report.
FAQ
We've helped startups complete hundreds of valuations. Here are the top questions.
When do I need a 409A valuation?
A 409A valuation report is valid up to 12 months from the valuation date or when a material event occurs – such as a new round.
With companies raising new rounds frequently, we include multiple 409A valuations in our Growth plans so you can better plan ahead.
How long will the process take?
We do valuations in half the time of most firms. It takes just a few business days to get to a final draft of your 409A valuation for review. For later-stage companies, the timeline may be a little longer.
Once you have your report, you can review the valuation for accuracy. You can connect with our valuation experts at any time during this process.
Who needs a 409A valuation?
Any company issuing stock options require a 409A valuation - this includes most startups who grant options as part of employee comp.
When you grant stock options to employees, you need a value to determine the value of these shares. For public companies, this is the stock price. For private companies, an independent 409A valuation is the only method to grant options on a tax-free basis to your employees.
What are the risks of non-compliance?
There can be severe financial consequences for your employees for non-compliance. If the IRS determines your 409A valuation does not meet standards, all the shares you granted to employees at that value would be subject to gross income tax. The IRS can also levy up to a 20% penalty on stock options on top of the back-tax.
While enforcements are rare, the IRS has successfully pursued cases in the past (See Credit Karma).
How does a 409A valuation work?
At a high level, there are three steps in a 409A valuation:
- Calculate company value: High growth, unprofitable tech companies often use the market approach. Your valuation specialist finds public companies in your domain and applies the valuation multiple to your own metrics.
- Determine the value of the common stock: The second step is to take that company value and allocate the value to the various share classes. This is more complicated than it seems because different shares (preferred) have different economic rights.
- Apply a discount for lack of marketability (DLOM). Your shares are not tradeable if the company is private. Your valuation specialist will then apply a discount to your share price because there is no liquid market to sell these shares.
How should I select my valuation firm?
You want to work with a provider who has experience valuing in your industry. For example, if you are a high-growth social network, don't pick an auditor in the south who is used to valuing profitable small businesses. This valuation will take longer and is less likely to be accurate.
Pulley’s team of experts, who have extensive experience across industries and company stages - from startups to unicorns, perform valuations in-house. Our team members have played a crucial role in helping numerous companies achieve successful exits through acquisitions and IPOs, with a cumulative market capitalization exceeding $20 billion.
What will the process be like on Pulley?
Once you request your 409A valuation on Pulley and submit the required information, a valuation expert will reach out if they need additional information or context.
Within one week, you will receive an initial draft of your 409A valuation and will have an opportunity to provide feedback.
Start your 409A valuation
Be ready for your investors with a 409A valuation and accurate cap table, all in one.
