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

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Option Grant Profile • Historical options – Options granted before January 1, 2005 • good faith determination – Options granted January 1, 2005 through December 31, 2006 • reasonable application of a reasonable valuation method 18
Scenario 1 • IPO likely in 2006 or 2007 – Company should seriously consider obtaining independent appraisal to manage Section 409A and SEC “cheap stock” concerns 19
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 and 12: Valuation Methods • Factors to co
Page 13 and 14: Valuation “Quasi” Safe Harbor
Page 15 and 16: Valuation “Quasi” Safe Harbor
Page 17: Case Study • Emerging technology
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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