My team has completed 3000+ independent 409A valuations for venture-backed startups and high-growth companies.
In this article, we’ll introduce you to our approach to valuations. And we’ll provide four alternative 409A valuation consultants for you to consider hiring.
It’s critical for compliance reasons that your 409A consultant has these five things:
Without these, your 409a will be at greater risk of being found faulty by the IRS and could have significant financial consequences for you and the employees you’ve given stock to.
We’ll share reviews, process and costs for the best 409A valuation providers out there today.
That’s us! I acknowledge that I’m a little biased here, so we’re going to be as transparent as possible below about our 409a valuation services, how they work, and our pricing.
At Eton, we deliver fast, affordable, always-compliant 409a valuations for all types of companies from startups to private equity.
Here’s why you should choose us:
I’m really proud of the work we do at Eton and the level of service we provide our clients.
Check out the testimonial below where, Mirna Daouk, Chief Financial Officer at Handle Financial recently shared her experience of working with Eton and it reaffirmed my commitment to our processes:
Eton 409a valuations never take longer than 10 days (on receipt of documents) and when needed, can be fast-tracked. Some clients ask for one-day turnarounds which we’re happy to accommodate.
But I find a 10-day turnaround suits most clients. The process is the same regardless of the timeline.
Here’s what a 10-day timeline and process looks like:
(Note: We recently wrote a thorough guide to the 409a valuation process should you wish to deep dive into the subject).
First, we’ll have a conversation to understand your needs and how complex your cap table is. We’ll tell you exactly what we need from you to get started (such as financial statements)
and once you’ve delivered those documents we’ll review them within 1 day.
At this stage, every valuation gets a dedicated manager and analyst to keep things on track and accurate.
We get to work using our extensive databases and keen analysis skills to put your valuation draft together.
On day 6 or 7 we’ll send you exhibit pages that show the calculation data we’ll use. This will include the methods we’ll follow, assumptions we’re making, data used, and a conclusion.
We’ll then invite you for a call to review the document. 85% of the time our clients finalize on the first draft. The rest of the time, we’ll agree with you on what needs to be changed and make those changes in one day.
We’ll send the revised draft back to you and get it finalized in 2 days.
And that’s it, your 409a valuation is complete.
The final step doesn’t usually happen. But if you are audited, we step up and support you through the entire process, working with the auditors (who our team usually knows from past work experiences) to make it as seamless and stress-free as possible.
And rest assured, our 409a valuations have never lost an audit.
We charge anywhere from $2000 to $8000 for a 409a valuation. The exact price will depend on how fast of a turnaround you need and how complex your business’s cap table is.
That said, most clients pay around $3000 for an Eton 409a valuation.
Want to learn more about our costing structure? Check out our article, “How much does a 409a valuation cost?” that breaks it down in greater detail.
You can see how our prices and services stack up against other 409a valuation providers below:
Overall, Eton’s 409a valuation services are the cost-effective choice for those looking for audit-defensible, compliant valuations.
A large number of our clients are startups and scaleups with ambitious growth goals who want to offer their employees an incentive and reward for their hard work.
Some names include:
We work directly with founders and finance teams as they prepare for funding rounds or just after they’ve closed a founding round so that their 409a valuation is timely and relevant.
We also regularly take on freelance 409a consulting work for law firms needing external support.
Clients usually come recommended to us by their lawyers or by other clients who have seen the work we’ve done firsthand and trust us to deliver time and time again.
Here are some of the experiences our clients have had. And one further example:
Want an impenetrable 409a valuation put together by expert CFA’s?
If you feel Eton may not be the best fit or you want to keep looking around before you settle on your 409a valuation consultant, then the first recommendation I’d make is for VRC.
VRC is a well-respected firm. Like us, they offer valuation & advisory services to businesses. 409a valuations is one of them.
They’re a large company with offices located across the US and the world. VRC’s international presence is a strength, but it can also mean its focus is divided across many markets. For clients needing very specific local market expertise, a more regionally focused firm might provide more in-depth local insights.
The one caveat I would add is that firms of this size usually move slower on your valuations, are more expensive, and are less flexible to your requirements.
There are often more bureaucratic boxes to check off with firms of this size, so you lose the personalized service.
Teknos is a firm of valuation consultants offering a wide range of valuation services. You can use them for 409a valuations.
They have a special focus on technology-related companies.
What I like about them is that they’re upfront about who they help and why they’re specialized to help them. I believe Teknos, and its founder Neil Thakur, are well-respected.
If their pricing and delivery timelines meet your requirements, Teknos is worth your consideration.
If you want to check them out you can do so at their services page here.
Aranca is a firm that does more than valuations. They divert focus to advisory services and research services in addition to their financial valuations.
It’s important to note that Aranca is headquartered and staffed overseas. This geographical factor may introduce certain challenges, particularly regarding time zone differences, which could impact their availability and promptness in service delivery.
Aranca’s ability to support US-based clients in English may also be something that should be assessed. Lastly, I would add that some online reviews indicate mixed feedback from Aranca’s clients.
Aranca may be an appealing option for you, but I would caution that it’s always best to choose a 409a valuation firm that specializes in the service you need. Only then can they truly be on top of rules, regulations, and best practices.
When searching for valuation services, you’re likely to come across Simple409a. Admittedly, I put them on the list not to recommend them but to acknowledge their popularity and to give my two cents.
“But, Chris, you said to choose a valuation consultant who focuses on valuations exclusively and 409a is literally in their name.”
You’re right. I did, but in this instance, you have to also weigh up that focus with the customer service and valuation quality that the firm can provide.
If by “Simple409a” they mean “streamlined and automated” valuation processes, this would give me pause because such an approach might not suit businesses with complex valuation needs requiring more nuanced and bespoke analysis.
A quality firm will always have an edge over an independent 409a consultant because they can:
I’ll break these down in more detail:
1/ A firm is a team not an individual and this team is full of experts.
And these experts, with years of experience behind each one of them, collectively contribute a depth of knowledge and a breadth of perspectives that an individual consultant might not match.
(In Eton’s case, our experts have experience from Deloitte, Ernst & Young (EY), KPMG, and PwC).
2/ Another key differentiator is access to expensive databases.
409A firms invest in high-quality, expensive databases that provide comprehensive market data, trends, and comparables. These resources are crucial for accurate valuations but are often financially out of reach for independent consultants. This access not only enhances the quality of the valuation but also ensures a more data-driven and market-aligned approach.
3/ And finally, individual consultants work… well, individually.
Whereas firms have processes that include checks and balances including a second set of eyes during the valuation process that mitigates errors and biases, ensuring a more objective and thorough analysis.
Ultimately, a firm like we have at Eton will get the job done faster, will have a greater chance of being accurate, and entirely defensible against the IRS.
Here are several commonly asked questions we get about the 409a process.
409a valuations cost anywhere from $2000-$8000 when you use Eton VS. The price is based on the company stage and turnaround time.
Most of our clients spend $3000 on their 409a valuation.
Other firms such as Deloitte will charge up to $30k for the same service.
There are cheaper options available, usually priced in a subscription model rather than a one-off project fee but the quality and safe harbor status of your valuation is immediately put into question with such providers.
Related Deep Dive: How Much Does a 409a Valuation Cost?
You can get a 409a valuation from Eton Venture Services (that’s us!) and you’ll have your valuation in your possession within 10 days, if not sooner.
409a valuations are performed by Chartered Financial Analysts (CFAs).
They’re trained to understand and choose methodologies that are most relevant for every valuation and to ensure USPAP compliance.
As long as you choose an experienced valuation firm with a proven track record you will receive an incredibly accurate 409a valuation.
Accuracy is important because an inaccurate valuation could be picked apart by the IRS in an audit and lead to high fees to both you as a company and to the employees you’ve given stock to.
The accuracy of your report will be influenced by:
At Eton, our 409a valuation services take anywhere from 1 day up to 10. It’s the same process regardless of the timeline.
At firms such as Deloitte, the 409a valuation takes months.
We’ve explained the nuances behind timelines in our article here: “how long does a 409a valuation take?“.
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.
