Important information & documents for 409A valuation

Haven’t yet found the proper details on what information and documents you would need for a 409A valuation? Well then, you have come to the right place. The moment you are thinking of giving out shares in your company, either for raising capital or for offering employee compensation, you are required to have a 409A valuation performed to know the value of your company.

Behind the scenes, this valuation process relies on a thorough review of the company’s financials, ownership details, and business outlook. Understanding what goes into this process—and why these documents matter—can make a big difference in how smoothly the valuation proceeds and how well the company is protected from potential tax and compliance issues.

Information and Documents for 409A Valuation

What information is needed for a 409A valuation?

To perform a 409A valuation of your company, it is important to get a clear picture of your company. Staying proactive—by updating your 409A valuation after material events and annually—demonstrates good corporate governance and supports your company’s growth and fundraising efforts.

A 409A valuation requires several key pieces of information about your company. Here’s what you’ll typically need to provide. The specific requirements may vary depending on your valuation provider and company stage. Early-stage companies with limited operating history will focus more on future projections and market opportunity, while later-stage companies will need more extensive financial history.

To help you better understand this, here is the information that would be required from you if you are about to have your 409A valuation performed:

#1 Valuation date

The valuation date is the time when the asset or company would be assigned a value in dollars. This term is used when the valuation of an asset needs to be made before it is distributed or when there is a periodic determination of worth for reporting purposes. It is important to give the valuation date as per the IRS rules for the 409A valuation process.

Also to clarify, the valuation date is not the same as the 409A valuation report delivery date. You can learn more about this at the end of this article.

#2 General Company information

You would also have to share all the details of your company. It can be in any form. You can create a company presentation, or an executive summary, or even a detailed business description. These things would help in the valuation as the person analyzing all would need to know everything about your company.

Other than this, you would also have to share details like:

• What does your business do?
• How does your company make money?
• In case your company is not yet profitable, how does it plan to make money later on?
• What are the dynamics of the industry?

All these things would help in understanding your company better. In short, it would help the analyst in choosing the right method for getting the 409A valuation for your company.

Note: If you feel that you prefer to have a call and explain everything about your company, give us a call. It would help the analyst ask questions and clear all doubts the person has while understanding all about your business. In short, it would help learning all about your business in a better way.

#3 Expected deadline for valuation report

Another thing that you would need to provide is the last date for when you would need the valuation report ready for whatever reason you need it. It would help the analyst schedule the process and timings to have the 409A valuation done for you on time.

#4 Comparable public companies

The analyst would also need the names of your competitor companies. Hence, you would need to select and provide them with the most appropriate comparable companies for their analysis. In case your idea is something new and you do not have any competitors, select the companies that are related to what you offer so that the analyst can make something out of it.

This includes the forward -looking statements, projections for 1-5 years projecting future revenue, expenses and growth, which are critical for income-based valuation methods.

#5 Recent and planned financial rounds

For the analyst to calculate your company’s value as per the 409A valuation rules, you would have to give all the financial statements of your company. These details would include the financial documents including the income statements, cash flows and balance sheets for the past 5 years of your company.

In case your company has been in business for less than 5 years, you would have to give all the financials for as long as your business has existed, that is from the incorporation of your company.

#6 Any secondary transactions

Other than the financial details mentioned, you would also have to give the year to date financial statements along with a trial balance up to the valuation date. If there are any subsidiaries in your business, you would also have to submit the papers for these businesses as well.

#7 Any convertible securities

You are also required to give all the information related to the other financial aspects of your company such as the equity. So, in case you have raised a convertible debt or equity in your company, you would have to submit all the associated documents and the terms of the investment. This is the reason why it’s important to keep all the details of your company’s equity update in the Cap Table. You can use Eqvista to help you manage and stay on top of all your company’s shares.

What documents to provide for the valuation?

You would have to offer a fairly extensive list of documents to the analyst so that the 409A valuation can be done right. This is not an exhaustive list, and there may be more or less documents needed, depending on the valuation appraiser doing your 409A valuation.

#1 Cap Table

A cap table offers an analysis of the percentage of ownership, the value of equity in each round of investment, the equity dilution, the investors and any other owners that the company has in it. It is based on the equity in the company, and lets you know who owns what and how much of the company along with why they own it.

This is an important part for getting the 409A valuation of your company, which is why you should have a cap table ready to give your analyst.

#2 Articles of incorporation & company bylaws

The next document that you would have to provide for your 409A valuation is your company’s corporate documents which include:

• The Articles of Incorporation: This set of formal documents has been filed with the government to legally have a company incorporated. The Articles of incorporation holds the company’s name, address, agent for service of process, and the amount & type of stocks that the company has. If your company has run for a long time and you have made changes to your Articles of Incorporation from the time your company was incorporated, you would have to provide the Amended and Restated Articles of Incorporation for the 409A valuation process.
• Company Bylaws: The company bylaws are used to direct the operations of the company throughout the life of the corporation. To explain better, the company bylaws are the rules that govern the company. It is like a single document where some rules and regulations are created for the company to follow.

Note: These documents are needed by the valuation analyst to learn all about the company and its features such as the various types of securities that the company’s capital holds. Additionally, you should give the most updated documents to make the process simpler. Providing an outdated document would cause the analyst to spend more time in finding out about the company. Hence, it is advised to always give the latest documents to have the 409A valuation completed on time.

#3 Last 3-5 years of financial statements (Income, Balance Sheet, Cash flow statement)

A financial statement consists of:

• Balance Sheet as of the valuation date
• Income statement (profit and loss)
• 2-3 years of Statement of Cash Flows (or since incorporation)

Note: Normally, these financials are not used directly in the valuation metrics, although they are highly important documents that should be given to the valuation analyst. This would help them learn more about the client or use it when there is a sanity check when the Discounted Cash Flow Analysis is used in the valuation process.

In fact, there are a lot of companies that do not have even three-years of statements. In this case, the company should provide as much historical content as they can to the valuation analyst so that they can take whatever they can into account.

#4 Future 3-5 years of financial forecast/projections

It is also important for companies with revenue to share the future 3-5 years of financial forecast report with the valuation analyst. Their financial forecast is an estimate of the future financial results that the company would have.

Note: This is needed so that the 409A valuation analyst can easily perform the Discounted Cash Flow analysis. The asset’s value is the present value of the cash flow of the future that is adjusted for risks. In case a company has recently raised capital in exchange for equity, then the Discounted Cash Flow Analysis would not work and the future forecast would not be necessary.

In case there isn’t any recent equity financing round and the future results have a lot of uncertainty, the Discounted Cash Flow Analysis would not be used as the 409A valuation method. In fact, it is understood that the hardest thing for companies is to get an accurate future forecast.

#5 Any outstanding debt

The last thing that you would have to give is the document stating any debt that your company has. You would have to provide all the term sheets for this so that the key information can be analyzed by the 409A valuation analyst. Outstanding debt is a tool for debt financing. It is the amount (or assets) that the company has to pay back, including interest for capital raised by the company.

Frequently Asked Questions

To understand more about what documents are required for a 409A valuation and other important information, here are some frequently asked questions that we have prepared and answered for you.

How often does my company need a 409A valuation?

A 409A valuation is required at least once every 12 months or after any material event occurs, such as new financing rounds, acquisition, or significant change in business operations.

Who can perform a 409A valuation?

Technically, anyone qualified can perform it; however, it is strongly recommended to use an independent third-party valuation firm to ensure an accurate 409A valuation.

How long does a 409A valuation take?

The process usually takes 2-4 weeks, depending on the complexity . However, providers like Eqvista have a turnaround time of 5-10 days and 3 days for expedited service.

Do I need a new valuation after raising a funding round?

Yes, a new round of financing is considered a material event that can significantly affect your company’s valuation, so a new 409A valuation is generally required.

Can I use the price per share from my last funding round as my 409A value?

No. Preferred stock sold to investors often has rights and preferences that common stock does not. A 409A valuation adjusts for these differences to determine the FMV of common stock.

Empowering Startups with Unlimited, Audit-Ready 409A Valuations—Only at Eqvista

By ensuring your company’s stock is valued accurately and in compliance with IRS regulations, you protect your business and employees from tax penalties and legal complications. Gathering the right documents and understanding the process can make your valuation efficient and defensible.

This is where Eqvista comes in. Eqvista stands out as a leading provider of 409A valuation services, especially for startups seeking affordable, audit-ready, and defensible valuations at every stage of growth. Every valuation is performed by highly trained, NACVA-certified specialists, ensuring compliance with IRS and AICPA guidelines and providing audit-ready reports.

Are you ready to start your 409A valuation? Contact us today!