This feature is available to users with Growth and Scale subscriptions. If you'd like to upgrade your subscription, please contact your Customer Success Manager.
This article will provide a step-by-step guide to using Shoobx to request a 409A Valuation Report to establish the Fair Market Value (FMV) of your company's common stock. If you're looking for a list of frequently asked questions about that process, see here.
Please Note: It's very important to ensure that your cap table (including all stock options, convertible notes, SAFEs and priced rounds) is up to date in Shoobx before you request a 409A Valuation report, because your provider needs to have accurate information to determine your valuation. If your provider has to pause the valuation process so that you can update Shoobx, it will slow down the process and delay your valuation. If you've already requested a valuation and have updates to make, please reach out to Client Support so we can help you get up to date.
Here are the steps for the "Request 409A" workflow:
- Request a 409A Valuation Report
- Provide Company Information (A Three Part 409A Checklist)
- Upload Requested Documents
- Review Valuation Request
- Sign Engagement Letter
- Wait For Draft Valuation
- Review 409A Draft
- Select Representation Letter Signatory
- Sign Representation Letter
- Wait For Final 409A Valuation Report
Request a 409A Valuation Report
There are two ways to start the 409A Valuation Report Workflow:
- On the Available Company Workflows page: Under Equity, select "Request 409A Report."
- During the Grant Shares workflow, you will also be able to begin this process. Please note that this is an embedded version of the "Request 409A Report," so the steps are identical.
If your board previously approved an FMV in a Board Consent, you will be given the option to use the existing FMV or set a new FMV using one of the two methods:
Provide Company Information (Part One, Two, & Three)
To get a more accurate, reliable valuation for your company, you will need to provide detailed information about your business. The information requested is detailed but straightforward. In general, you will need to answer questions about the nature of your business, your team, and finances—current revenue, debt, and anything on the horizon. Our checklist below offers a comprehensive list of the questions you will be asked during the workflow.
A quick note about navigating the workflow: Your responses will not be saved until you continue to the next page. If you need to navigate away from the workflow, you may want to save a copy of your responses so you do not lose any work.
The 409A Checklist:
- Valuation Date
- Registered "Doing Business As" name, if applicable
- States other than Delaware in which company was incorporated, if applicable
- Complete this statement: "Our company is in the business of..." (roughly a paragraph long)
- Number of full time employees
- Describe your current and future products/services and sales channels, and explain how the company generates (or intends to generate) revenue
- Describe your current and/or anticipated customer base
- Does this company have subsidiaries or affiliate entities? If so, describe the relationship, and ensure all relevant documents are uploaded (please note that you can upload these documents at a later step in the flow)
- Is this company currently involved in pending litigation? If so, please explain
- Were there significant company events after the valuation date chosen for this 409A report? If so, please explain
- Bios for the management team and board of directors (you can provide links to LinkedIn profiles as long as the profiles are public, you can provide a short description in the text box, or you can upload a page with this information at a later step in the flow)
- Describe your industry (define whether or not it is cyclical or seasonal, and the key players)
- Describe the competitive landscape for your company
- What do you see as your company's competitive advantage in the market?
- What are the biggest challenges your company is facing?
- Is there anything else about the company that the valuation provider should know?
- How has the company been funded to date? (please provide investment method, dollar amount, and closing date)
- Has the company had a previous 409A valuation?
- Has the company taken investment (debt, equity, other)?
- Is the company currently generating revenue? If not, does it anticipate generating revenue in the next twelve months?
- Does the company have outstanding debt?
- Describe the nature and timing of your company's next anticipated equity event
- Does the company expect to issue dividends in the next twenty four months?
- Please provide any other information about the company's finances that the valuation provider should know
Upload Requested Documents
During the upload documents process, the workflow will provide certain documents for you, such as the company Charter, Bylaws, and cap table. However, there are other requested documents that the 409A provider will need, which are related to your answers during the previous steps of the workflow. You are not limited to the documents on this list. Please upload any documents you feel may be relevant to your company’s valuation. In addition, the 409A valuation provider may reach out to you for more documentation, which you will be able to email directly to them.
Review Valuation Request
The "Review Valuation Request" step is akin to a "Checkpoint" step in other workflows. At this point you will be able to look at all of the associated documents in the process and ensure that everything is provided. Assuming everything looks as desired and has been entered accurately, you should continue.
Sign Engagement Letter
The next step is to sign the engagement letter, which has been provided by the valuation partner that will be completing your 409A analysis and report. Please sign and submit the letter to proceed with your valuation.
Wait For Draft Valuation
Shoobx will be submitting your information to our third-party valuation collaborator who will prepare your 409A Valuation Report. The process will continue as described below:
- The provider will review your documents within 2-4 business days and will reach out to you directly to let you know if any additional information is needed.
- Once the materials are complete, they will prepare a draft copy of the report. The draft typically takes two weeks to prepare.
- A member of the Client Support team will notify you via email as soon as the draft is ready for your review in Shoobx.
If you have any questions about the status of your valuation, please contact email@example.com.
Review 409A Valuation Draft
Once Shoobx has notified you that the 409A draft is ready to be viewed, you'll want to log into Shoobx and click back into this workflow. Here, you'll be able to review what the provider has prepared. If everything looks as desired, select "Accept Draft." If not, please correspond with your provider (who will have reached out to you before the draft was provided).
Select Representation Letter Signatory
Prior to finalizing your 409A valuation, an authorized representative of your company must acknowledge your understanding of the representations made for the 409A report. At this step you will be able to select a representative of your company who should be asked to sign the Representation Letter.
Wait For Representation Letter Signature (Sign Representation Letter)
Wait For Final 409A Valuation Report
The Client Support team will request the final draft of your valuation from the provider. The final report typically takes less than one week to prepare. The system will notify you via email as soon as the final 409A valuation is ready. Once complete, the "Request 409A Valuation Report" workflow will finalize, or the "Grant Shares" workflow will proceed automatically to the "List Grant Recipients" page. You can always view your company's 409A Valuation Reports in the Data Room (click into the "Stockholder Information" folder and the "Equity Valuation Reports" folder to view these reports).
Screenshots are for illustrative purposes only.
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