Early-Stage Companies
It’s difficult to know what your company is worth. In the past, you had to spend far too much money to get a valuation that you still couldn’t be sure fairly represented your company. Well, that time is over. We lend transparency to the opaque Private industry by providing you with better data for better deals.
We increase the flow of available, relevant, real-time private market data that gives you a better idea of the price of your securities.
Valuations You Can Count On
Avoid wasting time with the wrong valuation provider. The other, more popular valuation providers cut corners and provide over-valued shares to reduce compliance risk.
We give you a range of defensible outcomes that you can choose from, so you can make the right decision for you, your company, your employees, and your investors.
With Redwood You Can:
View relevant, actionable, industry-specific data sets customized just for you.
Use our proprietary simulation software to see thousands of possible valuation outcomes for common stock.
Use our automated solution to produce real-time valuations with better outcomes at audit-ready quality.
Save time and avoid silly mistakes with our industry-leading software that reads and interprets your cap table and corporate documents, so you don’t have to input information yourself. (Coming soon)
FAQ
We’ve helped hundreds of startups and established businesses complete valuations. Here are some common questions.
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A 409A valuation report remains valid for up to 12 months from the valuation date or until a significant event – such as a new funding round.
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A draft 409A valuation is typically ready for review within 3 to 4 weeks, but we have expedited options for timelines as short as one week. For later-stage companies, the process might take a bit longer.
Upon receiving your report, you can assess the valuation for its accuracy. We are happy to connect with you and your auditor at any point throughout the process.
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Companies issuing stock options or other equity compensation, including most startups, need a 409A valuation.
When granting stock options to employees, determining the fair market value of the stock is necessary to set the exercise price for those options. For public companies, the exercise price is the stock price on the date of grant. For private companies, the easiest way to grant options to your employees on a tax-free basis is through an independent 409A valuation.
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Non-compliance could lead to harsh financial implications for your employees. If the IRS determines your 409A valuation does not meet standards, all the shares granted to employees at that value could be subject to gross income tax. The IRS can also impose a penalty of up to 20% on stock options in addition to back-tax.
Although enforcement cases are uncommon, the IRS has successfully prosecuted cases in the past (see Credit Karma). 409A compliance is a part of due diligence for every investor and potential buyer. The absence of a compliant report can hinder or deter future investment.
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The 409A valuation process broadly involves three steps:
Estimate company value: For high-growth, cash burning tech companies, the market approach is commonly used. In the absence of a recent round of funding, you and/or your valuation firm identify public companies in your sector and applies the selected valuation multiples to the relevant company metrics.
Ascertain the value of the common stock: The next step involves allocating the company value to the different share classes. This can be complex due to the differing economic rights of different shares (such as preferred shares).
Apply a Discount for Lack of Marketability (DLOM): Since the company's shares aren't tradable if it's private, your auditor applies a discount to your share price due to the absence of a liquid market for these shares.
Key Contacts
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Fill out this form to send your contact information to one of our valuation experts. We will review your details, and then follow up with you to start your valuation.