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

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Accounting Considerations • AICPA Practice Aid – Valuation of Privately-Held-Company Equity Securities Issued as Compensation – Includes three valuation methodologies: • market-based • income-based • asset-based 28
Accounting Considerations • AICPA Practice Aid (cont’d.) – Ranks preferred methods: • Contemporaneous independent appraisal • Retrospective independent appraisal • Contemporaneous or retrospective “relatedparty” valuation – Pre-IPO companies should consider the AICPA Practice Aid 29
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 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: Remedial Measures • Alternative 1
Page 31 and 32: GOODWIN PROCTER LLP Boston Exchange

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