Private Company Stock Options: Determining Fair Market Value in ...

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Valuation Methods • A valuation method is not considered reasonable if it: – is more than 12 months old; – does not take into account all available information material to the determination of value as of the valuation date; or – fails to take into account subsequent events such as the resolution of material litigation or the issuance of a patent. 12
Valuation “Quasi” Safe Harbor • The proposed regulations provide a “quasi” safe harbor in the consistent use of one of the following methods: – Independent appraiser – Written report for illiquid stock of start-up corporation 13
Page 1 and 2: Private Company Stock Options: Dete
Page 3 and 4: The Law • American Jobs Creation
Page 5 and 6: The Law • 409A penalizes: - Disco
Page 7 and 8: The Law • Penalty for non-complia
Page 9 and 10: Valuation Methods • To qualify fo
Page 11: Valuation Methods • Factors to co
Page 15 and 16: Valuation “Quasi” Safe Harbor
Page 17 and 18: Case Study • Emerging technology
Page 19 and 20: Scenario 1 • IPO likely in 2006 o
Page 21 and 22: Scenario 3 • Neither IPO nor sale
Page 23 and 24: Modifications and Extensions • Mo
Page 25 and 26: Modifications and Extensions • Ex
Page 27 and 28: Remedial Measures • Alternative 1
Page 29 and 30: Accounting Considerations • AICPA
Page 31 and 32: GOODWIN PROCTER LLP Boston Exchange

Private Company Stock Options: Determining Fair Market Value in ...

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