Introduction

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 requesting a 409A Valuation Report in Fidelity Private Shares, used to establish the Fair Market Value (FMV) of your company's Common Stock. For more general information, see the frequently asked questions about the 409A process.

Request 409A Report workflow

The Request 409a workflow is comprised of the following sections:

• Request a 409A Valuation Report
• Provide Company Information
• Upload Requested Documents
• Review Your Cap Table
• Select Company Signatory
• Checkpoint
• Sign Engagement Letter
• Wait For Draft Valuation
• Review 409A Draft
• Sign Representation Letter
• Wait For Final 409A Valuation Report

Request a 409A Valuation Report

There are two ways to start the workflow:

1. From the Company Workspace, click on Start New Workflow > Request 409A Report.

2. When running the Grant Shares workflow, on the step to Define the Source of Fair Market Value, there is an option to Request a 409A Report. Please note that this is an embedded version of the Request 409A Report workflow, and the steps are identical.

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. 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. The 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 to prevent losing any work.

The 409A Checklist

Part One

• 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..." (This should be 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. (Note that you can upload these documents at a later step in the workflow)
  
  

Part Two

• 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 enter 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 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?

Part Three

• 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 investments (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 24 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 contact you for more documentation, which you can email them directly.

Review Your Cap Table

Download and review your company’s cap table. Your valuation provider needs to have up to date information to determine your valuation. If your provider must pause the valuation process so that you can update your cap table, it may delay the process and incur additional fees.

Make sure the data in Fidelity Private Shares is an accurate reflection of your company. Make any necessary additions or changes to your cap table before continuing.

Select Company Signatory

Select a representative from your company who can sign the Engagement Letter, which acknowledges the engagement of a third-party valuation provider. This same representative will later sign a Representation Letter to confirm the representations made in the 409A report.

Checkpoint

At this step, it is time to review all of your valuation materials. This includes all documents you uploaded, responses to the company information questions, your company Charter, Bylaws, previous valuation reports, and your cap table as of the date of valuation. Make sure all documents are current and accurate before continuing. Click Submit when you are ready to proceed.

Sign Engagement Letter

The designated signatory will be prompted to sign the Engagement Letter with the third-party valuation provider. The valuation cannot proceed until this letter is signed.  

Wait For Draft Valuation

Fidelity Private Shares will submit your information to our third-party valuation provider who will prepare your 409A Valuation Report. The process will continue as described below:

1. The provider will review your documents within two to four business days and will contact you directly to tell you if more information is needed.
2. Once the materials are complete, they will prepare a draft copy of the valuation report. The draft typically takes two weeks to prepare.
3. Fidelity Private Shares will notify you via email as soon as the draft is ready for your review.

If you have any questions about the status of your valuation, please contact filings.pvt@fmr.com.

Review 409A Valuation Draft

Once you have been notified that the 409A draft is ready to be viewed, return to Fidelity Private Shares and open this workflow. You will be able to review what the provider has prepared. If you have any questions or concerns at this point, you should contact your valuation provider directly. If everything looks as desired, select Accept Draft.