Hi, I’m Chris Walton, author of this guide and CEO of Eton Venture Services.
I’ve spent much of my career working as a corporate transactional lawyer at Gunderson Dettmer, becoming an expert in tax law & venture financing. Since starting Eton, I’ve completed thousands of business valuations for companies of all sizes.
Read my full bio here.
When you’re getting ready for a 409A valuation, it’s common to feel unsure about which documents are truly required and why they matter.
This guide breaks down the key documents and information used in a 409A valuation, explains how valuation teams review them, and shows how they come together to support a defensible fair market value.
Getting this right upfront saves time, avoids unnecessary follow-ups, and ensures the valuation is built on solid ground.
Before diving into the details, here’s a quick view of the information typically required for a 409A valuation:
Information or document | What it establishes |
Financial statements (income statement, balance sheet, cash flow) | How the business has operated to date, including revenue, expenses, cash burn, and runway |
Financial forecasts or projections | Management’s expectations for growth, spending, and future performance |
Capitalization table | Current ownership, equity structure, option pool size, and potential future dilution |
SAFE notes | How future equity may be issued and how ownership could shift upon conversion |
Convertible debt | Outstanding obligations that may convert into equity and affect dilution or risk |
Straight debt | Debt that must be repaid and sits ahead of equity in the capital structure |
Articles of incorporation | The company’s authorized share structure and legally permitted equity |
Company bylaws | Governance framework showing how corporate decisions are made and approved |
Stock option plan | Rules governing employee equity and how options are structured |
Pitch deck or business overview | Strategic context around the business model, market opportunity, and growth plan |
Here is a detailed breakdown of each document we request to prepare your 409A report and why it matters for the valuation:
Your financial statements (income statement, balance sheet, and cash flow statement) show what has already happened inside the business. They give a grounded view of revenue (if any), expenses, cash burn, and how much runway you have left.
Even if your company is early-stage or pre-revenue, these statements help establish where the business stands today and how it has been operating up to the valuation date.
They also help confirm consistency across the story. If your deck says one thing and your financials show another, that’s usually where follow-up questions come from. Clean, current statements help avoid that.
Forecasts explain how you expect the business to evolve. They show your assumptions around growth, hiring, spending, and cash needs over time.
For companies with established revenue, projections often play a central role in the valuation. When applying methods like Discounted Cash Flow, we start with management’s forecasts and apply independent judgment to model future earnings and discount them back to present value. The quality and reasonableness of these projections can meaningfully influence the outcome.
For earlier-stage companies, projections are typically used as context rather than as the primary valuation driver. They help the valuation team understand growth trajectory, ambition, and key milestones, even when other methods carry more weight.
In either case, valuation teams will scrutinize and adjust assumptions as needed, but they expect projections that reflect realistic, well-supported thinking rather than overly optimistic hockey sticks.
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The cap table is the ownership roadmap of your company and one of the most important building blocks of a 409A valuation. It shows:
Because a 409A valuation determines the fair market value of common stock, the valuation team relies on the cap table to understand how value is shared across different stakeholders and where common stock sits within the broader capital structure.
In some cases, we may also review recent financing documents (such as term sheets or stock purchase agreements) to confirm the economic terms reflected in the cap table.
SAFEs are agreements where investors put money into the company now and receive shares later, typically when the company raises a priced funding round.
Until that conversion happens, SAFEs don’t represent issued shares, but they do affect who will own the company in the future.
Valuation teams review SAFE documents to understand how much ownership may shift when those SAFEs convert. Terms like valuation caps and discounts matter because they influence how many shares SAFE investors receive, which affects the value of common stock.
Convertible debt is money the company borrows from investors, which may later turn into shares instead of being repaid in cash. It typically comes with interest, a maturity date, and rules for how and when it converts.
These details matter because the company is responsible for that debt until it’s repaid or converted. A near-term maturity date can pressure the company to raise funding or repay the loan, while large conversions can significantly increase shares outstanding.
Both can affect who owns the company and how much value ultimately belongs to common shareholders.
Providing up-to-date convertible debt documents ensures the valuation reflects the company’s true financial obligations and potential future dilution.
Straight debt includes loans that do not convert into equity, such as bank loans or venture debt. These obligations must be repaid and usually sit ahead of equity if the company struggles or exits.
Since debt increases financial risk and reduces the value available to equity holders, providing clear documentation is needed for the valuation to accurately reflect that risk.
Your articles of incorporation are the legal foundation of your equity structure. They define the types of shares the company is allowed to issue and how many shares are authorized.
These documents help confirm that what’s shown on the cap table is legally valid. If the cap table says one thing but the articles say another, that gap has to be resolved before the valuation can move forward.
Bylaws describe how the company is governed. They cover things like how board decisions are made, who has authority to approve equity actions, and how corporate processes are handled.
While bylaws don’t drive valuation directly, they round out the corporate record and support the integrity of the valuation file. They’re part of showing that equity decisions are made through proper governance, not informally.
The stock option plan sets the rules for how employee equity works at your company, including how many shares are reserved for options, who can receive them, and the general rules around vesting, exercising, and leaving the company.
Option grants are the actual options given to individual employees under that plan. These are typically summarized in the cap table, which shows how many options are outstanding and at what strike prices.
For a 409A valuation, the valuation team reviews the stock option plan to understand the equity framework, and the cap table to confirm what options have actually been issued. Individual grant agreements are usually only reviewed if there are special or non-standard terms.
Your pitch deck (or board deck or business overview) explains the business in a way numbers alone can’t. It shows what you’re building, who it’s for, why it matters, and how you expect to grow.
For early-stage companies especially, the deck often provides the clearest explanation of the business model, market opportunity, and long-term vision. It helps the valuation team understand the story behind the company, not just the spreadsheet.
While not always required, providing your deck, especially if recent, gives context that strengthens the valuation analysis.
Need a quick, directional estimate of your 409A valuation? Try our free 409A valuation calculator!
To build a complete picture of your company and arrive at a defensible 409A valuation, we look across all documents to understand whether they align and tell a coherent story.
The cap table serves as a foundation for the equity allocation in a 409A valuation. Because a 409A determines the value of common stock, we need to understand how value would flow to common shareholders after accounting for preferred stock rights and any senior debt.
The cap table shows us the full capital structure and the economic rights that determine how value would be distributed.
To model these outcomes accurately, we also review the underlying documents that define those rights, including:
Beyond this, the valuation approach shifts based on your company’s situation.
If you recently raised a priced round:
That financing becomes a key data point because it reflects what sophisticated investors paid for preferred stock in an arm’s-length transaction.
Your cap table reflects the round, and your articles of incorporation define the liquidation preferences and conversion rights attached to those shares. From there, we can work backward to determine a fair market value for common stock.
If there’s no recent financing:
This is common for annual 409A updates. In those cases, we rely more heavily on financial statements, projections, and other relevant market evidence.
We compare forecasts to historical performance and available cash to assess whether growth expectations are realistic and achievable.
If a deck shows ambitious growth while financials show flat revenue or limited runway, we place less weight on the projections and focus more on demonstrated traction and downside risk.
Generally, reliable documentation is the backbone of a defensible 409A. We can’t build safe harbor protection on incomplete information or unresolved conflicts between documents.
That’s why we work closely with you to close any gaps, clarify ambiguous terms, and ensure everything aligns.
We cross-check sources, apply rigorous judgment to risk factors, and don’t move forward until we’re confident the valuation reflects fair market value based on actual economic conditions. That rigor is foundational to safe harbor protection and defensibility under IRS review.
Related Read: 409A Compliance: 9-Point 409A Compliance Checklist (2025)
Whether you’re issuing employee stock options, completing an annual refresh, or preparing for audit, Eton provides audit-ready 409A valuations backed by Big 4-trained senior experts and 10,000+ completed valuations.
Every valuation is led by a senior expert, never passed to junior teams or automated workflows. You work directly with your valuation lead and have access to expert support throughout the engagement and beyond delivery.
Our reports are independently prepared and signed by qualified appraisers, with full supporting documentation behind every assumption and conclusion. With a perfect audit record, you can be assured your valuation will withstand IRS scrutiny, Big 4 audits, and investor diligence.
Contact us today to get started with your 409A valuation.
At Eton, most 409A valuations are completed within 10 days of receiving all required information and documents. If timing is tight, expedited options are available for an additional fee.
That timeline includes an initial consultation, a full review of your business and capital structure, valuation analysis, preparation of the draft, internal review, and delivery of a final, signed 409A report with detailed documentation of assumptions and conclusions.
To qualify for 409A safe harbor, your valuation must meet specific IRS standards that create a presumption the fair market value is reasonable. This means the IRS cannot challenge your valuation unless it is proven to be “grossly unreasonable”.
Safe harbor generally requires that the valuation:
You can learn about this in more detail in our complete 409A safe harbor guide.
Eton structures every 409A appraisal around these requirements. Each report is independent, fully documented, USPAP-compliant, and signed by a qualified appraiser, with a long-standing track record of passing auditor and IRS review.
A 409A valuation is generally valid for 12 months, unless a material event occurs sooner. Material events can include new financing rounds, acquisition activity, major revenue changes, or secondary transactions.
If a material event happens, the valuation should be updated before issuing any new stock options.
After receiving your 409A report, you should:
Schedule a free consultation meeting to discuss your valuation needs.
Chris Walton, JD, is President and CEO and co-founded Eton Venture Services in 2010 to provide mission-critical valuations to private companies. He leads a team that collaborates closely with each client’s leadership, board of directors, internal / external counsel, and independent auditors to develop detailed financial models and create accurate, audit-ready valuations.
