In October 2004 the U.S. Congress enacted the Internal Revenue Code §409A (“409A”), as a part of the American Jobs Creation Act of 2004 in response to perceived abusive compensation practices and stock option pricing practices (i.e. issuing stock options below fair market value). 409A governs all privately held companies seeking to issue any form of deferred compensation, which includes many types of equity-based compensation such as stock options. The IRS requires that private companies establish that their stock options are not being issued “in-the-money” or with an exercise price below “fair market value.”
Brookline Valuation Services, Inc. provides custom valuation services for Section 409A valuations. We are familiar with complex financial structures and the key issues that impact the value of private company stock options as well as a company’s common equity, preferred equity, and debt securities. Brookline Valuation Services’ professionals are experts in traditional valuation methods and also have the transactional experience that is important in developing a considered valuation assessment for private companies with complex capital structures.