In 2025, getting a 409A valuation isn’t just about following IRS regulations—any startup, including yours, would be wise to do it. The valuation helps founders stay compliant, set fair stock prices for their team, and plan financially for bigger goals.
A 409A valuation shows a high level of professionalism and transparency in investor and key stakeholder relations. It also instills trust in your financial competence, lowers the risk of an audit, and confirms the correct status of your cap table. All these factors can help your company stand out positively and open the door to productive dialogue on valuation, growth, and the company’s future direction.
As rules tighten and investors watch more closely, picking the right provider is key. This guide helps founders understand why it’s needed and how to choose the right partner—keeping you compliant and investor-ready.
Why is the 409A valuation important for startups?
For startups, 409A valuations are important as they allow them to comply with IRS requirements and guide crucial business choices. The knowledge of value not only saves them from expensive errors but also becomes one of the right steps for future growth.
Compliance with tax regulations
Entrepreneurs who start companies in the United States must adhere to the stock option rules prescribed by the Internal Revenue Service’s (IRS) Section 409A. This is to ensure that the grants are made at the proper fair market value. Following these rules has multiple positive effects on investors. One of the advantages is that it demonstrates to investors the startup’s commitment to financial control, and secondly, it lowers investment risk by legal non-compliance.
Employee remuneration
Compensation packages today usually include stock options to attract, retain, and motivate top talent. A 409A valuation helps set the right price for these options, preventing them from being seen as too cheap or too expensive. It also makes sure employees won’t face surprise taxes if they decide to exercise their options.
Raising capital and exit planning
Understanding the worth of a startup is highly important, as investors use it as a basis for depicting the organization’s worth and capability to scale. An up-to-date valuation is essential regardless of whether you are raising funds or going through the acquisition process. It forms the basis for discussions between the primary owners and the investors. In the case of a company exit, a 409A valuation helps determine how to share the profits among the stakeholders.
It is recommended for startups that they do a 409A valuation every year to keep their employees’ stock options in line with the changing business value. At the same time, it is also important before granting options for the first time or before a major funding round. Qualified third-party providers conduct these valuations and are able to analyze financial data and weigh various aspects to determine the fair market price.
What happens if a 409A valuation is not conducted?
Skipping a 409A valuation might seem like a time-saving idea, but it has the potential to lead to severe repercussions for both your company and your workers.
- Tax consequences: When stock options are undervalued, the company and employees are at risk of incurring high tax penalties from the IRS that may have an impact on finances and employee morale.
- Hiring and maintaining employees: The absence of a 409A can result in uncertainty regarding stock value, which can make it challenging to attract and retain top-tier talent. Stock options are frequently included in competitive compensation packages; therefore, their absence may result in a disadvantage.
- Reputation risks and legal issues: Not following regulations can hurt your company’s reputation. Also, not having a 409A valuation can lead to legal problems, expensive lawsuits, and more harm to your reputation.
How do you select the 409A valuation provider?
Getting the top 409A valuation provider is pivotal to receiving a precise and trustworthy outcome. Below are the things to look for:
- Experience and knowledge: Make sure the provider carrying out the valuations has plenty of experience, especially in your industry. Check how many valuations they’ve done and whether they specialize in your field.
- Certifications and credentials: Look for experts with the right certifications, like an Accredited Senior Appraiser (ASA) or a Certified Valuation Analyst (CVA). They should clearly understand how valuations work and the methods used.
- Reputation and client feedback: Consult with organizations that have worked with them and review their testimonials. Inquire about the quality of their report and their professionalism and responsiveness.
- Compliance and accuracy: Confirm that the provider knows the IRS rules for this type of valuation and meets all compliance requirements.
- Flexibility and customization: Ensure that the provider customizes the valuation to meet the unique requirements of your business, taking into account factors such as funding cycles, market conditions, or unique aspects of your industry.
- Speed and efficiency: Pick a provider who is capable of delivering the valuation in good time. They must be efficient in their data collection and analysis.
- Cost-effectiveness: When you compare costs, the main thing is to select the value you will receive for the price. Opt for high-value choices—no matter how cheap they are, accuracy, quality, and professionalism are the foundation of a business.
- Clear communication and teamwork: Seek an individual who is amenable to collaborating with your team and communicates effectively. Throughout the process, they should be responsive and provide a straightforward explanation of complex concepts.
Why choose the right 409a valuation partner for your startup?
Selecting the proper 409A valuation expert is essential to your company’s financial well-being. The right provider enables you to have reliable and legally compliant equity valuations, helping you protect your business and employees. This, in turn, not only helps you gain investor confidence but also reduces legal problems and allows you to execute your equity plan in the best way.
By finding the appropriate ally, you can focus on growing your business without being concerned about legal issues or persuading investors.
Best 409A Valuation Service Providers
One of the most important decisions for companies is selecting the right 409A valuation provider. The following list highlights the most reliable and accurate providers in the market.
Eqvista
Eqvista is considered a trusted provider of 409A valuations for startups and mid-sized businesses. The valuations they provide are secure and audit-ready. They comply with IRS regulations and are conducted by recognized professionals (NACVA and CFA). Each valuation is personalized and tailored to your business’s unique nature.
- Target audience: Startups and mid-sized businesses that need regularly updated assessments.
- Pricing: It has an affordable pricing plan designed for companies of all sizes. Its yearly 409A valuations start at $990, and it offers a free plan for startups. This gives Eqvista a big price advantage over competitors.
- Valuation Completion Time: The standard delivery takes 5–10 days, but a quicker 3–5 day option with daily updates is available for $490.
- Features: It offers cap table management, financial modeling, share issuance, and an employee dashboard for better transparency.
- Valuation Access: Users get unlimited access to 409A valuation services all year round. The service allows companies to update their values anytime without incurring extra costs.
- Customer Reviews: Eqvista earns praise from clients for being their top valuation firm through its user-friendly platform, comprehensive services, and great customer support.
Carta
Carta is a recognized platform that primarily provides the 409A valuation feature through the cap table platform and does not offer a separate valuation service like Eqvista. While it is true that their platform offers a wide range of features, depth is still an issue for companies that require very detailed valuation services.
- Target audience: Startups managing their equity use Carta for their valuations.
- Pricing: Carta uses a pricing model where multiple services—like cap table management and valuations—are bundled together. The pricing is unclear and often not listed on their website, and it is usually higher than that of other providers offering similar services. However, reports indicate that the starting price is around $4,550 per year.
- Valuation Completion Time: Longer turnaround times result in hindrances to users who want immediate access to equity management.
- Features: It gives you automated cap table management, scenario modeling, compliance features, real-time data, and shareholder data for equity and liquidity events.
- Valuation Access: It provides 409A valuation services on an annual basis or in the event of a significant change. These valuations are valid for 12 months, and additional valuations could result in extra charges depending on the subscription plan.
- Customer Review: Carta’s users admire the service for being customer-oriented and, most importantly, practical. However, a number of users are not pleased with the high fees as their business complexities expand and with mistakes in the valuation.
Big 4 Firms
The big 4 accounting firms—Deloitte, Ernst & Young (EY), PwC, and KPMG—offer 409A valuations as part of their broader financial, audit, and advisory services. With global reach and expertise in taxation and compliance, they are popular choices for large and fast-growing businesses in complex financial settings.
- Target Audience: Tech unicorns, multinational startups, private equity-backed firms, and established private companies with complex equity structures.
- Pricing: Starting pricing for engagements comes in at $200K and can go up to $800K, depending on the complexity of the transaction.
- Valuation Completion Time: Task completion will be delayed due to extensive review and analysis.
- Features: The company gives audit and assurance, tax services, consulting, financial advisory including valuations, and technology solutions with global expertise and compliance focus.
- Valuation Access: Normally, these companies provide valuation services for annual updates or after a material event has occurred. However, customers cannot access these services at any time.
- Customer Review: Their expertise and audit defense are highly appreciated by users, but some point to the increased costs and longer delivery times as factors that make them less accessible for early-stage startups.
Teknos Associates
Teknos Associates is a well-known valuation and advisory firm based in San Francisco. They offer 409A valuation services, mainly for growing businesses in the tech and emerging industries. They focus on IT, life sciences, cleantech, and blockchain sectors to ensure fair valuations that meet IRS standards and are audit-ready—especially for stock options under IRC 409A and ASC 718. Their responsive service is designed to meet the needs of fast-growing businesses.
- Target Audience: Startups and companies in fast-growing tech industries.
- Pricing: Pricing for 409A valuation services isn’t listed on their website, and companies usually need to contact them for a custom quote.
- Valuation Completion Time: Their process usually takes more time due to detailed assessments.
- Features: The firm supports businesses in corporate advisory, tax compliance, and financial reporting valuations to pave the way for growth through various development stages.
- Valuation Frequency: They provide valuations annually or after major events, with clients able to reach out as needed.
- Customer Reviews: Customers value Teknos’s capacity to provide clear and accurate statements and address assessment problems as necessary.
Choose the Right 409A Valuation Provider
Choosing the right 409A valuation service is a big deal for startup founders. A good provider helps keep your company on the right side of IRS rules, gives an accurate value for your stock options, and supports your long-term financial goals—things that matter for raising money, giving out equity, or planning an exit.
If you are looking for a provider, trust is key. You will also want someone with experience in your industry who is audit-ready, clear about how they work, and fair on pricing.That is why it is smart to talk to a few providers before deciding. Picking the right one helps keep your business safe and sets you up for future success. Eqvista is a great choice—they offer affordable, reliable 409A valuations that meet IRS standards and are built for early-stage startups. You can reach out to them to learn more.