Pre-IPO Stock Sales Creating 409A Valuation Chaos

"The potential impacts of private secondary market sales on 409A valuations are, in a word, complex. Transactions may reflect discounts or premiums for marketability, liquidity, and/or control, each of which impact the fair market value of private company stock. Fur ther, purchasers may be willing to pay a premium for access to private stock they would not otherwise have, thus overpaying vis-à-vis fair market value. Such overpayments are sometimes referred to as a posturing or access premium, and are difficult to quantify. Similarly, sellers may be willing to take a lower-than-fair price due to extenuating financial exigencies. These issues are just the tip of the iceberg. When Arcstone is engaged to value equity securities where secondary sales have occurred (or are contemplated), we take a close look at the facts and circumstances surrounding the transactions themselves."

Article from SecondMarket.com

Optcapital Lobbying for Modifications to IRC 457A

"K&L Gates is lobbying for Optcapital, an executive benefits consulting firm, on supporting “modification of Internal Revenue Code section 457A to be included in technical corrections legislation,” according to lobbying disclosure records. Daniel Crowley, a Republican and former general counsel to the House Speaker’s office, and Patrick Heck, a former aide to Sen. Max Baucus (D-Mont.), are working on the account."

HERE

Shrewd Comments on 409A Valuations from Pro Appraiser

Focus on Evidence and More Bashing of Foreign Valuation Companies - Here

"Several clients ask us questions about what types of information is collected and why. You see, 409A valuations have got more to do with substantiation and evidence and less to do with valuation techniques and number crunching. One of the things we have noticed, especially, in valuation work from overseas is use of data sources, enumeration and explanation of data, and calculation methods that dont quite fit in with US Tax Court lingo or evidentiary standards. We collect information that is more appropriate to pass the evidentiary standards set out in usual IRS court cases and US GAAP standards. This also makes the audit work a breeze as most information they are looking for is set in in the manual"

Summary of 409A Issues in Severance Agreements

Chuck Shulman's Article HERE

Skadden Partner Completes 409A Handbook

Sneak Preview Here

Regina Olshan

Erica Schohn

Flashback: Regina Organizes Push for 409A Extension