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.
In this article, I’ll explain how long a 409a valuation takes and what factors influence the timeline.
All of our 409a valuations take less than 10 days. However, if an expedited timeline is needed, we can do it in as little as one day (which comes at a higher valuation cost).
In my experience, big 4 firms like Deloitte, Ernst & Young (EY), KPMG, and PwC) tend to take a month or longer to complete the same 409a valuations.
Below I’ve outlined in greater detail the factors that influence how long your 409a valuation can take.
More complex businesses, with multiple revenue streams, intricate capital structures, or international operations, may require more time for a thorough valuation.
At Eton, business complexity doesn’t influence the timeline of your 409a valuation because our team is well-versed in all business stages and cap tables. But that may not be the case with other providers
Smaller, less experienced firms will need longer to understand the market, the methodologies, and other factors that influence valuations.
The speed of the valuation process is also dependent on how quickly and completely you can provide the necessary financial information and documents.
The 409a timeline doesn’t begin until the required documents are in your 409a consultant’s possession.
Eton’s 10-day turnaround begins at the delivery of your documents. Luckily, many of the documents we ask for you’ll already have readily available (they’re needed for things like raising funds).
Want to prepare your documents ahead of time?
Find a list of the documents we ask for in this article: The 409a Valuation Process | How It Works
Experienced firms with a streamlined process can often complete valuations more quickly than those without a specialized focus on 409A valuations.
That’s why we can guarantee a 10-day turnaround. All of our valuators know the process inside out and can apply it to different timeframes.
The process that gets followed is more important than the speed. It’s what will protect you from IRS audits. But of course, there’s a balance to be struck—you have deadlines to meet.
If you can find a provider with a process that guarantees safe harbor and who works quickly, at a competitive price, you’ll receive a reliable 409a valuation in two weeks or less.
A “safe harbor” means your valuation is considered valid and defensible by the IRS. It’s established when an independent third party with rigorous processes and audit-defensible skills conducts a 409a valuation. Automated cap table management companies often can’t provide a safe harbor 409A valuation due to the complexities and specific requirements involved in these valuations—it takes real human judgment and understanding of legal nuance.
I’ve seen businesses turn to automation-based providers for valuations that are quick and cheap. They always regret it.
The issue with automated providers is your 409a valuation won’t necessarily be USPAP compliant. And if that’s the case, your valuation loses safe harbor status. If you’re audited, you’ll have to defend the 409a to the IRS. If they find your 409a valuation to be unreasonable, you and your employees will face financial penalties.
With a safe harbor, which is something Eton guarantees, the onus is on the IRS to prove your valuation unreasonable. We’ll also be on hand to help you through the audit process and work with the auditors on your behalf.
Usually, ‘fast 409a valuation’ refers to a 409a process that involves automation.
If you read my note above, you’ll know I don’t recommend any provider or 409a consultant who uses automation in their valuation services. It puts your safe harbor status at risk and leaves you more susceptible to a fraudulent valuation that, if audited, could result in hefty financial penalties.
If you have an emergent need for a 409a but don’t want to risk compliance, Eton offers a faster turnaround service. As mentioned, we can complete your valuation in as little as 1 day from the delivery of documents.
It will cost more than our usual price range of $2500-$4000, but it will guarantee you get a 409a valuation that’s on time and compliant.
With Eton, you don’t have to sacrifice quality for speed and you don’t need to pay astronomical fees for quality service.
Our valuation team has been trained by the best firms in the country and ensures your 409a valuation is accurate and favorable to your goals.
You’ll always get safe harbor status and have access to a provider you can trust for future valuation needs.
I personally bring my experience at the law firm Gunderson Dettermer (business law for venture-backed and public tech companies) to every client interaction. So you’ll always receive up-to-date, industry-specific advice you can trust.
Get in touch with me today to discuss your needs, business complexity, and desired timeline. From there I’ll create a custom quote based on our pricing structure.
Schedule a free consultation meeting to discuss your valuation needs.
Chris co-founded Eton Venture Services in 2010 to provide mission-critical valuations to venture-based companies. He works closely with each client’s leadership team, board of directors, internal / external counsel, and independent auditor to develop detailed financial models and create accurate, audit-proof valuations.
