A 409A valuation is good for 12 months, provided no significant changes or material events affect the company’s value.
However, several factors can impact this duration:
Material Events: Events such as a new funding round, a significant change in revenue or profitability, mergers, acquisitions, or any other event that could materially impact the company’s financial outlook, may necessitate a new valuation. To understand when a 409A is required read our full guide here.
Annual Update: If no material events occur, you must complete a 409A valuation every 12 months to comply with IRC 409A.
It’s important to stay up to date with their 409A valuations to ensure compliance with IRS regulations and to avoid potential tax penalties for their employees.
A material event refers to any event or occurrence that can significantly impact a company’s financial position, operations, or stock value.
These events are important because they may necessitate a re-evaluation of the company’s stock value, impacting things like the pricing of stock options.
Examples included funding rounds, mergers, and major financial contracts.
Related read: How much does a 409A valuation cost?
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Related Read: Check out this Real 409A Valuation Report Sample
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