Complex Carried Interest Valuation Gets Additional Scrutiny by IRS

  In recent years, our team has seen an increasing number of valuation requests from general partners (“GPs”) of venture capital and private equity funds related to carried interest. For those unfamiliar, the carried interest is also referred to as “the profits interest” because it entitles the GP to a portion of the profits earned … Continued

The Changing Landscape for Portfolio Valuations

  Unlike public equity and fixed income fund managers, venture capital and private equity funds lack an active exchange to price the changing value of their investments. Instead, they perform valuations – oftentimes on a quarterly basis – so they can report updated values to their investors. This year, the disruption caused by the COVID-19 … Continued

Estate and Gift Valuation Planning in the 2020 Election Year

Executive Summary Recent estate planning articles are full of speculation about potential tax changes related to the upcoming 2020 US election. Here is the one consensus piece of advice observed from numerous articles by reputable tax planners and professional advisors: Use your lifetime gift tax exclusion now if you can afford it. Making gifts of … Continued

How a Sloppy 409A Valuation Nearly Cost This CFO $600,000

  What is the real cost of a 409A valuation? As startup-focused valuation providers, we often talk to founders and CFOs of early-stage companies who suggest a couple thousand dollars is sufficient to obtain a 409A valuation. While it may be true that’s a price quote from a low-cost automated provider, it’s rarely the real … Continued

COVID-19 and Valuations: What You Need To Know

  Executive Summary Two key things to consider when seeking a professional valuation of your business for 409A purposes Why “material events” should be on every founder’s radar during the COVID-19 pandemic The specific ways COVID-19 could impact a company’s valuation and therefore significantly influence its 409A Introduction The business world is going through unprecedented … Continued

Appeals Case Highlights Critical Buy-Sell Agreement Issues

Executive Summary Business owners and their professional advisors should review corporate agreements to ensure buy-sell provisions are not out of date and will work as intended. Common traps related to the valuation process and buy-sell agreement language – which often lead to costly shareholder conflicts – are highlighted in a recent appellate court decision. Using … Continued

The Factors That Drive a Startup Valuation

An In-Depth Interview with Redwood Valuation Director Tim Montgomery   Redwood Valuation’s Director Tim Montgomery recently sat down with the founder of WatchPitch, Trey Scott, to provide a behind-the-scenes look on what goes into the valuation of a venture-backed company. Tim discusses the numbers that matter – revenue growth, funding, cash runway – and also … Continued

Everything You Wanted to Know About Purchase Price Allocations

The following interview was conducted with Redwood Valuation’s Tim Iversen, Director (ASA). Tim has nearly 20 years of experience in business valuation during which time he has completed over 700 valuations for both public and private companies. What is a purchase price allocation? Purchase price allocations are the process of assigning a fair value to … Continued