Transparent 409A


transparent 409A Today Carta is making four announcements about 409A valuations.


TLDR;

  1. We are open sourcing all 409A valuation models
  2. 409A report turnaround time is one business day
  3. We are lowering 409A pricing
  4. 409A reports include all waterfall and valuation models

It is an oddity that knowing the value of any public company is free (see Google Finance) but knowing the value of your own private company is not.

The biggest problem with 409A has been the industry itself. Providers have greedily overcharged companies. But worse, they created a culture of secrecy around how companies are valued and what those valuations mean.

A proper 409A creates a waterfall on the capital structure of the company. The waterfall is the most important piece of a valuation because it captures the embedded liquidation preferences. This is hidden in most reports. It should not be. CEOs and Board Directors should see their company’s waterfall in their 409A report.

At Carta we share our capital structure beyond our Board. For example, we include our waterfall in our offer letter directly pulled from our 409A valuation.

eshares capital structure We have four announcements to help companies value their stock and understand their capital structure.

  1. We have open-sourced all 409A valuation models. Companies have everything they need to value themselves and create their own waterfall.
  2. Our turnaround time for a 409A report is one business day.
  3. We lowered 409A subscription prices to make them affordable for all companies. Learn more here.
  4. We include the actual financial models used in every 409A report so CFOs, Board Directors, and Auditors can verify the report.

selected valuation methodologiesCarta 409A Valuation Report

valuation modelAttached Valuation Model


The days of valuing private company stock as an opaque administrative exercise are ending. We need to understand what these assets are worth. This is a step in that direction. We will continue to drive transparency and education. Stay tuned.

Related articles


What’s Rule 701 and what’s recently changed?

Learn more about Rule 701, recent updates, and how to stay compliant at your company. Everything from the history of Rule 701 to the most recent changes.

What is a 409A valuation?

Learn everything you need to know about section 409A of the internal revenue code. From what is a 409A valuation to 409A methodologies and process.

Equity 101 – Equity Basics for Founders

Learn the basics of equity, how to distribute equity to early employees, and what a cap table is

eShares, Inc. DBA Carta, Inc. is a transfer agent registered with the U.S. Securities and Exchange Commission. The services and information described in this communication are provided to you “as is” and “as available” without warranties of any kind, expressed, implied or otherwise, including but not limited to all warranties of merchantability, fitness for a particular purpose, or non-infringement. Neither eShares, Inc. DBA Carta, Inc. nor any of its affiliates will be liable for any damages, including without limitation direct, indirect, special, punitive or consequential damages, caused in any way or arising from the use of the services or reliance upon the information provided in this communication or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure. Transfer Agent services for DTC-eligible registered companies provided by Philadelphia Stock Transfer, a Carta affiliate. Carta Securities LLC is a broker-dealer and a member of FINRA and SIPC. Contact: eShares, Inc. DBA Carta, Inc., 195 Page Mill Road, Suite 101, Palo Alto, CA 94306.

© 2018 ESHARES, INC. DBA CARTA, INC.