How Much Does a 409A Valuation Cost? 409A Prices in 2024

How Much Does a 409A Valuation Cost?

409A valuations typically cost anywhere from $2500 to $4000.

Where you fall in that range will depend on the complexity of your startup’s funding stage and the turn-around time required.

409a valuation costs

For early-stage startups that are happy with a turnaround time of 10 days, expect your 409A valuation to cost close to $2500.

However, if you’re a company with a more complex investment structure (such as a Series B company or later), then your fee will fall closer to the $4000 price bracket.

An expedited 409A valuation will incur a higher fee. So if you need your 409a valuation services sooner than 10 days then expect to pay a small premium.

Factors That Determine Your 409A Valuation Cost

We consider two things when pricing your 409a valuation:

  • Complexity (stage of development)
  • Turnaround time (with anywhere from 1-10 days available to you)

Because no two 409a valuation needs will be the same, we always provide a custom quote and are happy to jump on a call to explain the cost and timeline of services.

“Complexity” comes down to your cap table which will tell us how many rounds of investment you have and what type of investment it is.

If you’re a new startup without outside investment, then your complexity level is low. But if you’re a Series B company or onward, you’ll have multiple levels of investment to analyze.

“Turnaround time” is as simple as it sounds. It’s the speed at which you need the service completed. Our standard service takes 10 days but we can do it as fast as one day.

Other providers may consider different factors. 

These factors include:

  • Industry
  • Company size
  • Company age
  • Share structure complexity
  • Company stage

Age, size, and industry don’t impact how we price your 409a valuation at Eton. Instead, we focus on share structure and company stage to define complexity.

Free 409A Valuation Services: Should You Use Them?

You may have noticed some companies offer free 409A valuations, typically thrown in with their other services.

There are three reasons I’d recommend avoiding these:

  1. A cap table software (like CARTA) cannot offer your 409A valuation a safe harbor against the IRS which could lead to time wasted defending your valuation to tax authorities.
  2. Your investors want to mitigate risks and a dodgy 409A valuation from a cap table provider is a big red flag that could make them take their money elsewhere.
  3. Cap table providers often overvalue common stock by almost 30–50%, which is a big demotivation for employees and defeats the whole purpose of having an option plan in the first place.

Let’s look at each one in turn.

1. Cap Table Platforms cannot provide your business a safe harbor

In terms of 409A valuations, a safe harbor is when your valuation is considered valid and defensible by the IRS. And unless the IRS can prove that your valuation is ‘ unreasonable’ your valuation cannot be found false.

What is a safe harbor?

It’s highly debatable whether Cap Table platforms follow reasonable methods and are USPAP compliant.

Here’s why:

  • They’re not an independent provider and certainly aren’t specialists in 409a valuations meaning there’s a conflict of interest between their services = not reasonable
  • They rely on automation and likely do not sign off on every 409a valuation manually = not reasonable.

If your 409A valuation doesn’t come with a safe harbor, which you’re at risk of with cap table providers, you will have to spend time and resources defending the valuation yourself.

If the valuation is proven unreasonable and does not meet fair market value, then you could face:

  • Any deferred compensation for current and previous years is now immediately taxable
  • A further 20% tax is applied to all deferred compensation
  • And an accrued interest on the revised tax amount

2. Potential and current investors don’t trust cap table Platforms

Why avoid cap table providers besides tax consequences?

Investors want to mitigate risk. Part of legal due diligence is 409a compliance and if you’re using a provider who can’t guarantee that safe harbor you could be delaying funding or even losing out on investment opportunities altogether.

That’s because automated 409A valuations are often rejected by audit firms and investors will often require an audit firm to look at your 409A history. This becomes more important the more complex your cap table is.

3. They often overvalue common stock by almost 30–50%

Even if automated cap table sourced reports satisfy the compliance checklist, they often inflate the value of common stock, sometimes by up to 30–50%.

When this reality comes to light, it only hurts and demoralizes employees.

They may find their options less attractive if they perceive them as unfairly high, which can undermine the very incentive schemes designed to motivate and retain them.

What’s included in our 409A valuation cost?

Our fee includes:

  • an expert valuation on par with “big 4” accounting firms
  • a guaranteed safe harbor
  • a seamless audit process (in the event you’re audited) because our valuators know the auditors who would handle the case
  • unlimited access to me, Chris Walton (every client gets a calendar link to schedule a chat for any reason whatsoever) and the rest of our legal experts

As part of your 409A valuation, we’ll follow a 6-step process:

1. Information Collection

2. Valuation Modelling and Analysis

3. Draft Reports Delivered

4. Client Review and Approval

5. Board/Audit/SEC/IRS Support by Eton Senior Staff

Remember, you’re also paying for an efficient timeline. The entire process can be done between 1 and 10 days from the delivery of your documents.

Keeping 409A Valuation Costs Low: Choosing Your Provider (Without Sacrificing Quality)

Selecting the right 409A valuation provider is a balancing act between cost, quality, and compliance.

Here’s what I’d avoid and what I’d look for in a provider:

Avoid:

  • Providers that rely solely on automated services. These often fail to grant the safe harbor protection necessary to withstand IRS scrutiny.
  • Providers offering a mix of services may have divided loyalties, which can compromise the objectivity of your valuation.
  • Valuations that take more than 10 days. Often you need a valuation for a material event such as just before a funding round. You don’t have time to wait months for a report.

Look for:

  • Providers with a proven track record. Experience is a hallmark of reliability and quality, ensuring your valuation stands up to legal and financial examination.
  • A provider who is as invested in your success as you are. Exceptional customer service means they’re ready to support you at every turn.
  • Choose a provider focused solely on valuations. At Eton, valuation isn’t just one of the services we offer—it’s the only service, ensuring undivided expertise.
  • A provider recognized by your legal counsel adds an extra layer of credibility and assurance that you’re in capable hands.

By following these guidelines, you’ll find a provider that offers not just a competitive price, but also the quality and safe harbor status essential for your peace of mind and compliance.

Why Choose Us?

Our valuation team all come from Big 4 accounting firms. But what does that mean for you?

That means we can deliver the highest caliber of valuation (the same you would get with Deloitte, Ernst & Young (EY), KPMG, and PwC) without you paying the high ticket price that comes with one of the Big 4 firms.

409A valuations from a major firm like those I’ve listed can run you anywhere from 10k up to $25k. This is a lot of money when you can get the same, if not better quality from us, for less.

And in a much shorter time; those same firms take 2-3 months compared to our max of 10 days.

There are providers out there who use automated valuation methods and as a consequence can charge less for 409a valuation services. They usually come in at $2000 which will be one of the least expensive 409a valuation options on the market.

The issue here is that automated 409a valuation may not be (and is probably not) USPAP compliant. They don’t provide a safe harbor—a defensible, valid valuation to the IRS.

📕 USPAP = Uniform Standards of Professional Appraisal Practice.

If you’re audited by the IRS and your 409A doesn’t qualify for safe harbor, you will need to prove your 409a values your company shares at fair market value.

With Eton’s 409A valuations, you always get safe harbor status and the burden of proof is on the IRS.

So even if audited, your focus can stay where it needs to be: growing your business. Plus, we’ve never lost an audit.

409a valuation price comparison chart

In need of 409A valuation services that are fairly priced, high quality, and USPAP compliant?

Talk to our team here to find out exactly how much a 409A valuation would cost you at your stage of business.

409A Valuation Costs & Pricing FAQs

Here are some common questions we get at Eton on this topic.

How do you determine if the cost of a 409A valuation is worth the money?

Your 409A valuation is like buying an insurance policy. It’s not just about cost—it’s about the value of compliance, the peace of mind it brings, and the avoidance of hefty penalties from the IRS.

It’s always worth paying for a dedicated specialist firm over a cheap, and potentially risky 409A provider such as from a cap table Platform. But at the same time, you don’t need to go to a major firm such as Deloitte and fork out more than $10k+.

Ask yourself:

  • Do I want to feel secure and confident in the service provided?
  • Am I getting the 409A report in 10 days or less?
  • Can I get top-tier service without paying top-tier price?

If you can answer yes to those then the 409a valuation is worth the money.

At Eton, we ensure that our valuations are a smart investment, providing you with a robust defense in the unlikely event of an audit. And we’re competitively priced considering it’s the equivalent if not superior to the likes of Deloitte, Ernst & Young (EY), KPMG, and PwC.

What does a 409A valuator do?

A 409A valuator looks at the nitty-gritty of your company’s financials, market conditions, and complex cap tables to determine the fair market value of your company’s stock.

With every 409A valuation, they will assess which valuation method is most applicable and will get you a true, favorable fair market valuation.

It’s a meticulous process that ensures your stock option pricing aligns with IRS regulations and protects both you and your employees.

Can I do my own 409A valuation?

Technically, you could, but it’s akin to representing yourself in court—possible, but fraught with risk.

The IRS requires that the valuation be conducted by a qualified, independent appraiser, especially as your company grows.

Doing it yourself could lead to an IRS challenge, and without the proper expertise, you might find yourself in hot water.

How long does a 409A valuation take?

At Eton, we’ve streamlined the process to be as efficient as possible. Our standard turnaround is 10 days, but we can do it in as few as one.

Compare that to Deloitte, Ernst & Young (EY), KPMG, and PwC where 409a valuation services take months.

We’ve explained the nuances behind timelines in our article here: “how long does a 409a valuation take?“.

Why is your 409A valuation so low?

The 409A valuation often comes in lower than what founders expect because it’s not a measure of future potential but a snapshot of current fair market value.

It’s a conservative estimate that takes into account various risk factors and market conditions to arrive at a value that is defensible and compliant with IRS regulations.

Where can I get a 409A valuation?

While there are many providers out there, it’s crucial to choose one that brings a blend of speed, accuracy, and compliance.

At Eton, we offer Big 4 expertise without the Big 4 price tag, all while ensuring USPAP compliance and safe harbor status.

What is safe harbor status in terms of a 409A valuation?

Safe harbor status means your 409a valuation is presumed accurate unless the IRS can prove otherwise.

To get this status, your 409a valuation provider will need to follow USPAP standards and methodologies.

This is something that Eton Venture Services provides as a core part of our valuation process, ensuring that your valuation stands up to the most rigorous examination and that the burden of proof always lies with the IRS.

Still undecided? Take a read of our article comparing the top 409a valuation consultants for hire for further details on our services.

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President & CEO

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.

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