Our tax and valuation professionals can help your company determine the fair market value of common stock. Cendrowski Corporate Advisors will make sure that your 409A valuation is compliant with all IRS regulations and prevent your company from receiving IRS penalties. We can service public companies and private companies and our expertise extends to all industries. Our team will make sure that you meet your requirements in regards to audit practices as well as tax compliance from the issue of common stock. Our team has decades of experience in all facets related to 409A valuation.
We can provide 409A valuation for startups funded by venture capital firms as well. Startups that are looking to issue common stock are required to receive a new 409A valuation for every round of financing provided to their company. We can help facilitate valuation of those stock options so that the company can go out and secure other means of financing.
We can also service companies at any stage in their company lifecycle: from early stage start-ups to mature private companies. We can use your companies’ financial reports and information in comparison to the competition surrounding your industry to provide an accurate and easily measurable valuation.
Example Engagement: Stock Forecast
We were engaged by the CFO of a healthcare consulting company founded in 2017. The engagement consisted of a valuation of the company for purposes related to stock-based compensation. Since the company was relatively young, there was not a lot of historical financials to factor into the valuation, and because the company was significantly ramping up revenue, much of the valuation had to be determined by projections/forecasts. We also had to perform an assessment on the market that they were targeting and determine how much market share they could capture.
The companies’ management provided forecasts based on their previous year’s actual sales, and we were able to extrapolate a value based on these cash flows discounted back to present value based on the associated risks of being a start-up. What was interesting in this particular engagement had to do with company’s business model, which reflected strong margins and minimal capital expenditures. As a consulting firm, most of their expenses came from salaries and wages. Also, capital expenditures for this company were practically non-existent as they needed very little fixed assets to generate revenue. The companies’ most significant assets were the employees, and it was interesting to analyze how cash flows through this business based on those circumstances – all of which alters the value of the practice. We provided the client with a formal report for use related to stock-based compensation, which was used to issue stock to their firm’s current and future employees.
