The simplest way to get a 409A valuation


Like the old adage death and taxes are the only certainties in life, so too are 409A valuations just as inescapable for founders. These valuations determine the fair market value (FMV) of the startup’s common shares and ensure that startups stay compliant with relevant regulations.  

Below, we’ll cover: 

  • The most common ways founders can obtain a 409A valuation.
  • Demonstrate why getting it through an independent valuation firm is the easiest and most recommended way.
  • List out some of the most reputable valuation firms in the market. 

Common ways to get a 409A valuation

When obtaining a 409A valuation, founders have access to three possible avenues: doing it themselves (i.e., in-house), using online tools, or delegating the process to a 409A provider.

Doing it yourself

Taking the 409A valuation yourself eliminates the need to spend money on hiring an external appraiser and ensures that the valuation only considers the information and documentation you want to include. After all, founders often have the most innate understanding of the ins and outs of their startup.

However, this avenue is only advisable if the startup’s founders or employees have extensive, relevant experience in conducting 409As. Otherwise, the risk of running afoul of the IRS’s stringent regulations skyrockets. But even if that were the case, achieving safe harbor status through an in-house valuation is extremely challenging due to potential conflicts of interest. 

Using valuation tools

Alternatively to doing the entire valuation from scratch, startups can utilize dedicated 409A valuation software to produce their reports. Tools like this are often designed and equipped with automated calculators and pre-built templates to streamline the process.

That said, despite the utility and simplicity of such tools, they fall short on a number of fronts. Like the first approach, they won’t generally provide safe harbor protections, and the software itself may not be tailored to meet the unique nuances of your startup and industry. But above all else, using software simply cannot replace the value and expertise that independent appraisers bring to the table.

This brings us to the next point.

Why independent valuators are the best option

The quickest and safest way to get a 409A valuation by far is to hire an external, independent appraiser to do the heavy lifting for you. Here’s why:

Dedicated experts

409A valuation providers provide startups with direct access to teams of seasoned experts. These usually include qualified professionals with backgrounds in relevant fields such as finance, law, and accounting. With the firm’s expertise combined, founders will receive high-quality, accurate third-party 409A valuations, so long as their valuator is reputable.

On another level, independent appraisers can also assume an advisory role, sharing knowledge that could benefit the startup beyond the mechanical process of getting a 409A report. This could involve the provider proactively identifying and mitigating compliance risks, providing insight into market trends, and even updating founders on recent changes in the regulatory landscape, which should be accounted for to avoid future issues.

Independence from startups

Because 409A valuation firms are completely separate from your startup, the valuations produced will be unbiased and objective, ensuring that a realistic FMV is appraised and that business decisions made based on the FMV are as informed as possible. Likewise, independent valuations can also demonstrate good faith and a commitment to accuracy to potential investors and clients.

Legally, startups stand to benefit as independent appraisals are generally granted safe harbor status, thus shifting the burden of proof onto the IRS in the case of a dispute. In addition, this provides a solid line of defense against any relevant penalties. 


Getting a 409A valuation that is accurate, audit-ready, and timely is crucial to avoid penalties. That said, valuations can be time-consuming and directly impacted by a multitude of factors ranging, i.e., the startup’s industry, size, stage, and capital structure. This means that valuations could take as little as a few hours to weeks, depending on your unique situation. 

With the aid of a valuation firm, startups can receive 409A reports rapidly and consistently within a set period of time. This can remove uncertainty from the equation and make planning easier for founders. Further, valuators will usually remind you when you need to obtain a new 409A valuation, either because 12 months have passed or a material event has occurred.

Best providers in the market

Knowing that the most effective way to get a 409A valuation is through an independent valuator is only the first step. The second is knowing how to find the right 409A valuator. While this is something we’ve covered, here are some of the most reputable firms in the market founders can sift through:


Sitting as one of the most established 409A valuation providers in the industry, Aranca has provided thousands of valuations across countless industries for startups of all stages.

A proponent of efficiency and accuracy, Aranca delivers reports within ten days while their analysts spend a minimum of 40 hours per valuation to ensure only high-quality reports are produced that comply with the most stringent IRS, SEC, and Big 4 review standards.

Groots Valuations

Groots Valuations is a highly specialized valuation services provider with extensive experience in all things tax, 409A, and legal. 

With their team of qualified and certified professionals, they have established a solid track record of providing timely and audit-ready valuations by diving into their deep pool of expertise. 


As one of the largest full-service valuators in the industry, Anderson has successfully produced thousands of 409A reports for companies of all sizes that are backed by the biggest names in the private equity and venture capital space.

With experience working with pre-IPO startups to beyond, providers like Anderson practically guarantee that your reports are always accurate and defensible, and that any valuation queries you may have are promptly addressed by their dedicated teams.

Obtaining a 409A valuation is imperative for startups to determine the fair market value of their common shares and comply with regulations. While there are different ways to get a 409A valuation, doing it in-house or using online tools fall short on a number of fronts and do not generally provide safe harbor protections. Independent valuation firms can be the best option for startups as they offer dedicated experts, independence from the startup, and timeliness. Furthermore, valuations produced by independent appraisers could demonstrate good faith and a commitment to accuracy to potential investors, employees, and the IRS.

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