The Cost Of Compliance For 409A/123R Valuation: The Higher Costs Of Getting It Wrong

Sponsored By SVB Analytics

Topics:

Accounting

Compliance & Governance

Professional Services

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Abstract:

Private companies must now meet a substantially higher standard in the valuation of their shares for both tax and financial reporting purposes, with the passage of IRS Section 409A and SFAS 123R. Even at the earlier stages, venture-backed companies are being encouraged, if not instructed by their investors, to obtain third-party valuations to support their positions. Corporate boards, recognizing potentially increased liability, are also pressing for outside valuations. Meanwhile, investors are pushing their portfolio companies to reduce burn rates and to conserve cash due to the poor prospects for the exit markets and a slowing economy. Compliance expenses are a natural place for CFOs to look to cut costs, and outside valuations are often viewed as a necessary evil by both companies and investors. However, understanding the true requirements for compliance with 409A and 123R may make CFOs think twice about sacrificing quality at the altar of lower cost.

DETAILS

Sponsored by: SVB Analytics

Released: October 05, 2009

Length: 7 pages

Format: PDF (135 kb)

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