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🇺🇸 US · Valuation409A valuation
Also called: 409a, fair market value appraisal
In one line
An independent appraisal of a US private company's common-share value, used to set option strike prices at a defensible fair market value.
In plain English
US tax rules require companies to get a neutral expert to value their common stock, usually once a year. That number becomes the strike price for new option grants and the 'official' value of common stock.
If you were explaining it to a 5-year-old
It's when a neutral referee decides how much one LEGO brick is worth today, so nobody can cheat on the price when handing them out.
Why it matters when you sell
The 409A is often far below the preferred price investors paid — useful as a floor reference when you're estimating what your common shares might fetch.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
Primary references for this term: IRS (US tax). Our definitions are written in plain English and kept evergreen — see the glossary methodology. General information, not advice.
Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.