Key Insights into 409 A Valuations

About the Course:

This session provides an overview of the rationale for Internal Revenue Code Section 409A Valuations as well as the extent of the penalties for non-compliance. Basically, companies that award stock to employees cannot do so at levels significantly below their fair values as this would essentially be a form of compensation that falls under capital gains tax rates which are lower than income tax rates.

This course demonstrates powerful examples of the following four methods to allocate enterprise value between preferred and common stock:

  • Current Value Method
  • Option-Pricing
  • Probability-Weighted Expected Return Method (PWERM)
  • Hybrid Method

In walking through the related case studies, Mark Zyla teaches the listener about issues such as:

  • How best, expected and worst case liquidity events impact valuation
  • How conversion rights impact valuation
  • How "in the money" and "out of the money" stocks impact valuation
  • How to assess equity rights for various classes of stock to establish breakpoints
  • How volatility and term impact valuation of various forms of stock in emerging companies
  • Why pre-money value from term sheets plus the current round is not useful as enterprise value
  • When is the PWERM method better than option pricing models
  • Why do accounting firms often use the option pricing method
  • How do voting rights, redemption rights and automatic conversion impact valuation
  • How should discounts for lack of control be applied under 409A valuations
  • Are dates slipping during the valuation process
  • What kinds of cash adjustments should be made when valuing emerging companies

Course Leader: Mark L. Zyla, CPA/ABV, CFA, ASA, Managing Director, Acuitas, Inc.

As a Managing Director of Acuitas, Inc., Mr. Zyla has provided valuation consulting for various types of entities for the purposes of mergers and acquisitions, financial reporting, tax planning, corporate recapitalizations, as well valuing various types of intellectual property and other intangible assets for many purposes.

Prior to joining Acuitas, Mr. Zyla was formerly a practice leader for PwC's Corporate Finance Consulting Group for the Southeastern U.S. Mark is the author of, Fair Value Measurements: Practical Guidance and Implementation (2010) published by John Wiley & Sons, Inc. Mark is the co-author of the courses, "Fair Value Accounting: A Critical New Skill for All CPAs" and "Valuing Goodwill and Other Intangible Assets" published by the AICPA. Mark is also co-author of "Fair Value Measurements: Valuation Principles and Auditing Techniques" published 2009 by Tax Management, Inc., a division of the Bureau of National Affairs.

Mr. Zyla received a BBA degree in Finance from the University of Texas at Austin and an MBA degree with a concentration in Finance from Georgia State University. He also completed the Mergers and Acquisitions Program at the Aresty Institute of The Wharton School of the University of Pennsylvania and the Valuation Program at the Graduate School of Business at Harvard University. He is a Certified Public Accountant, Accredited in Business Valuation ("CPA/ABV"), a Chartered Financial Analyst ("CFA"), and an Accredited Senior Appraiser with the American Society of Appraisers certified in Business Valuation (ASA).

Course Length: Approx. 1.5 hours

$295.00 PER USER

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Need help purchasing this course? Please contact Neomi Barazani at 609-919-1895 ext. 100 or at