IRC § 409A Valuation Services
The Treasury Department and the Internal Revenue Service have put into place final
regulations interpreting the deferred compensation rules under IRC Section 409A.
Amounts subject to Section 409A that are deferred under a nonqualified plan are subject
to current income taxation unless the nonqualified plan complies in form and in operation
with the election, distribution and acceleration requirements of Section 409A.
Internal Revenue Service commentators have expressed concern with respect to the
application of section 409A to stock options and stock appreciation rights.
Specifically, the commentators have expressed concern that although the issuer of a
stock right intended to establish an exercise price not less than the fair market value
of the stock at the time of grant, the issuer of the stock right may not be able to
demonstrate that the exercise price of the stock right was determined using a
reasonable valuation method. Accordingly, where a taxpayer can demonstrate that the
exercise price of a stock right granted was not less than the fair market value of the stock
at the date of grant and that the value of such stock was determined using a reasonable
valuation method, then that valuation will meet the requirements.
A Business Valuation (or stock valuation) is an appraisal that
determines the fair market value of a business enterprise or its equity. Fair market
value represents the price at which a willing buyer and a willing
seller, both being informed of the relevant facts about the business,
could reasonably conduct a transaction, neither person being under compulsion to
The professionals at Cambridge Partners have performed
business and/or stock valuations for companies engaged in numerous industries,
including, but not limited to: retail, food & drink, medical, automotive, consumer
services, software, technology, finance, rubber, transportation, chemical, pharmaceutical, insurance,
finance and banking, professional services, entertainment and many others. The following illustrates valuations
performed by our firm:
If you would like additional assistance or would like to discuss a stock option/409A appraisal,
please contact Cambridge Partners & Associates for an initial evaluation consultation.
- 409(a) valuation of a national branded food products company owned by a private equity group
- Valuation of a specialty steel products business
- Software company business valuation for a reporting unit of a Forbes 100 Japanese company
- Stock valuation of a New York based talent agency which represents well known classical artists, instrumentalists and orchestras
- Business valuations of several of the nation's largest branded food products companies
- Valuation of the common and preferred stock of a specialty chemicals company in Texas
- Common stock valuation of a Northern Europe domiciled metals business as part of a cross border tax strategy
- Stock option valuation of a plastics company
- Business valuation of a hi-growth pharmaceutical company
- Valuation of a leading specialty products retailer