{"id":7900,"date":"2020-10-05T14:11:01","date_gmt":"2020-10-05T14:11:01","guid":{"rendered":"http:\/\/www-staging.carta.com\/sg\/?p=7900"},"modified":"2021-03-05T06:54:29","modified_gmt":"2021-03-05T06:54:29","slug":"carta-409a-late-stage-private-co","status":"publish","type":"post","link":"https:\/\/www-staging.carta.com\/sg\/blog\/carta-409a-late-stage-private-co\/","title":{"rendered":"Carta 409A valuations for late-stage, private companies"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Carta has delivered over 17,000 valuations since entering the <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/409a-valuations\/\"><span style=\"font-weight: 400\">409A<\/span><\/a><span style=\"font-weight: 400\"> market in 2016, and our valuations team has grown to over 50 individuals with a combined valuation experience of over 100 years at major firms including Deloitte, KPMG, EY, Moss Adams, Grant Thornton, and Andersen Tax.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">We entered the 409A market believing it was fragmented and <\/span><a href=\"http:\/\/www-staging.carta.com\/blog\/fixing-409a\/\"><span style=\"font-weight: 400\">burdensome<\/span><\/a><span style=\"font-weight: 400\">, and over time we identified <\/span><a href=\"http:\/\/www-staging.carta.com\/blog\/the-problem-with-409a-valuations\/\"><span style=\"font-weight: 400\">problems<\/span><\/a><span style=\"font-weight: 400\"> and <\/span><a href=\"http:\/\/www-staging.carta.com\/blog\/modernizing-409as\/\"><span style=\"font-weight: 400\">modernized<\/span><\/a><span style=\"font-weight: 400\"> the process with software. More recently our team has been building an improved and streamlined process for our late-stage clients. <\/span><b>Our goal is to ease the burden of annual, semi-annual, or quarterly 409As for late-stage CFOs and VPs of Finance.<\/b><\/p>\n<p><span style=\"font-weight: 400\">Right now, roughly 100 of Carta\u2019s current 409A clients will have access to the improved workflow. A third of those companies are subscribed to semi-annual or quarterly 409As with an expected exit within the next 12 to 24 months. Over half are audited by the Big Four and nearly half have earned \u201c<\/span><a href=\"https:\/\/pitchbook.com\/blog\/what-is-a-unicorn\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400\">unicorn<\/span><\/a><span style=\"font-weight: 400\">\u201d status.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Here\u2019s what you can expect with our improved process:<\/span><\/p>\n<h2><b>Improved data collection<\/b><\/h2>\n<p><span style=\"font-weight: 400\">To begin the 409A engagement, you can log into your Carta account and complete the online request form. We\u2019re currently redesigning the request form for our late-stage clients. This will allow you to be proactive when selecting a valuation date.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The updated request form will ask a short list of questions and require the minimum amount of documentation necessary for our team to prepare for a call. Some information we\u2019ll need:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Point of contact<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Audit and law firm information<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Historical and forecasted financial statements<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Other important qualitative factors (e.g. LOIs, details about a secondary transaction, etc.)\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">We won\u2019t require any burdensome details that can be discussed during a call, and your capitalization table and other documents are <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/cap-table-management\/\"><span style=\"font-weight: 400\">already tracked<\/span><\/a><span style=\"font-weight: 400\"> on Carta, which allows us to auto-validate that information when you submit your request.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7915\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-8-2.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved data collection assistance<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Completing the request form should be as easy as placing a coffee order; but if you need help, you\u2019ll have a dedicated representative to guide you through the process, and our 409A support team is just an <\/span><a href=\"mailto:val-operations@carta.com\"><span style=\"font-weight: 400\">email<\/span><\/a><span style=\"font-weight: 400\"> or phone call away. We will also remind you when it\u2019s time to update your 409A by sending reminders before the 409A is about to expire.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Dedicated team<\/b><\/h2>\n<p><span style=\"font-weight: 400\">After you submit the request form, we\u2019ll email the 409A point of contact with a link to schedule a call with a dedicated Carta team. This team will work with you throughout the entire Carta 409A process and will stay on the assignment for each valuation moving forward. This will help us streamline the process whenever you need a new Carta 409A.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7914\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-7-2.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved collaboration<\/b><\/h2>\n<p><span style=\"font-weight: 400\">The initial call with the Carta team will take place as early as one day following submission of the request form. By the day of the call, our team will have reviewed your submission in detail.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The purpose of this call is for you to meet the team, for Carta to receive an update on the business, and for Carta to contextualize the documentation submitted with the request. We\u2019ll discuss your company\u2019s IPO plans, inbound LOIs, performance relative to expectations, financial statements and assumptions in your company\u2019s projections, risks and changes to the business, recent or imminent funding rounds, and secondary transactions. We\u2019ll also use this call to set expectations for the deliverable.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The goal of the request form paired with a review call is to minimize multiple calls and\/or emails during data collection and verification. Again, we want to make the Carta 409A process as easy as possible for late-stage CFOs and VPs of Finance. The call should take less than an hour, and we recommend including any individual at the company necessary to address the topics outlined above.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7911\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-4-4.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved turnaround<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Carta will finish the analysis after the initial call and deliver a draft report within 5-10 business days following the latter of (a) the valuation date, (b) the request form submission date, or (c) the date of the initial call. Our team will reach out to your company\u2019s point of contact with questions and\/or updates as we work through the analysis.<\/span><\/p>\n<p><span style=\"font-weight: 400\">How can we deliver a report so quickly? We\u2019ve significantly refined our proprietary valuation software since creating it in 2016, and we\u2019ve integrated health checks, modules for conducting sensitivity analysis, and an easy-to-use report editor for company-specific customization. Also, with over 100 years of combined valuation experience, we\u2019re very good at what we do.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7912\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-5-4.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p><img loading=\"lazy\" class=\"wp-image-7913 aligncenter\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-6-5.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved deliverable and review<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Once complete, you can download the PDF draft report through your Carta account. Your dedicated Carta team will be available to answer questions, discuss key inputs and assumptions, and receive suggestions for revision.<\/span><\/p>\n<p><span style=\"font-weight: 400\">For late-stage companies, we provide a differentiated report that includes additional qualitative and quantitative information to support the analysis through board review and audit.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7910\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-3-7.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved audit process<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Once you\u2019ve approved the valuation report, we\u2019ll support you throughout the <\/span><a href=\"http:\/\/www-staging.carta.com\/events\/thanks\/409a-valuation-audits\/\"><span style=\"font-weight: 400\">409A audit process<\/span><\/a><span style=\"font-weight: 400\">. Over half of our late-stage clients are audited by the Big Four, and we\u2019re working on a number of features and processes to make the audit process more streamlined\u2014stay tuned.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7909\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-2-6.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Improved analysis for IPO and acquisition<\/b><\/h2>\n<p><span style=\"font-weight: 400\">One third of our late-stage clients expect to exit via an IPO or acquisition within the next 12 to 24 months. Under those circumstances, our team will consider the Probability Weighted Expected Return Method (\u201cPWERM\u201d) for the company\u2019s 409A. The PWERM places discrete weightings on one or several exit scenarios discussed in detail with management, and has been <\/span><a href=\"https:\/\/releasenotes.carta.com\/pwerm-valuations-in-app-nNPyg\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">integrated into our software<\/span><\/a><span style=\"font-weight: 400\"> for enhanced turnaround time.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Carta will also consider all <\/span><a href=\"https:\/\/support.carta.com\/s\/article\/acceptable-409a-methodologies\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">methodologies<\/span><\/a><span style=\"font-weight: 400\"> accepted by the AICPA Practice Aid, IRS, and SEC.<\/span><\/p>\n<p><span style=\"font-weight: 400\">If your company is expecting a complex exit scenario or has a complex liquidation structure, we\u2019ll work with all relevant parties to understand the bespoke nature of the agreement(s). Having delivered over 17,000 valuations, our team has become familiar with a multitude of situations.<\/span><\/p>\n<p><img loading=\"lazy\" class=\"aligncenter wp-image-7908\" src=\"https:\/\/www-staging.carta.com\/sg\/wp-content\/uploads\/sites\/9\/2020\/10\/Component-1-9.png\" alt=\"\" width=\"700\" height=\"368\" title=\"\"><\/p>\n<p>&nbsp;<\/p>\n<h2><b>Carta as a platform<\/b><\/h2>\n<p><span style=\"font-weight: 400\">Carta is a platform, which means a lot can be accomplished using our tools. The valuation report can be approved by your board using Carta\u2019s <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/board-management\/\"><span style=\"font-weight: 400\">board management software<\/span><\/a><span style=\"font-weight: 400\">. You can also conduct <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/asc-718\/\"><span style=\"font-weight: 400\">stock-based compensation reporting<\/span><\/a><span style=\"font-weight: 400\">, <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/scenario-modeling\/\"><span style=\"font-weight: 400\">scenario modeling<\/span><\/a><span style=\"font-weight: 400\">, and <\/span><a href=\"http:\/\/www-staging.carta.com\/private-companies\/\"><span style=\"font-weight: 400\">a multitude of other features<\/span><\/a><span style=\"font-weight: 400\"> without leaving the Carta platform. In the near-future, Carta will be launching <\/span><a href=\"https:\/\/cartax.com\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400\">CartaX<\/span><\/a><span style=\"font-weight: 400\">, the first vertically integrated market ecosystem for private equity.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">If you\u2019re a current Carta customer not using Carta\u2019s 409A, talk with your Customer Support Manager about getting started.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">If you\u2019re not a Carta customer, <\/span><a href=\"http:\/\/www-staging.carta.com\/pricing\/\"><span style=\"font-weight: 400\">learn more about our plans<\/span><\/a><span style=\"font-weight: 400\"> or <\/span><a href=\"http:\/\/www-staging.carta.com\/requestdemo\/?organization=PrivateMarket\"><span style=\"font-weight: 400\">talk to an expert<\/span><\/a><span style=\"font-weight: 400\">\u2014we\u2019re looking forward to working with you.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h6><em>DISCLOSURE:\u00a0This communication is on behalf of eShares Inc., d\/b\/a Carta, Inc. (\u201cCarta\u201d). This communication is not to be construed as legal, financial, accounting or tax advice and is for informational purposes only. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.<\/em><\/h6>\n<h6><em>All product names, logos, and brands are property of their respective owners in the U.S. and other countries, and are used for identification purposes only. Use of these names, logos, and brands does not imply affiliation or endorsement.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>Our team has been building an improved and streamlined 409A process for our late-stage clients. Here\u2019s what you can expect with our improved process:<\/p>\n","protected":false},"author":117,"featured_media":7906,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[24,19],"tags":[26,107,93],"acf":[],"_links":{"self":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts\/7900"}],"collection":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/users\/117"}],"replies":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/comments?post=7900"}],"version-history":[{"count":0,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/posts\/7900\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/media\/7906"}],"wp:attachment":[{"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/media?parent=7900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/categories?post=7900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www-staging.carta.com\/sg\/wp-json\/wp\/v2\/tags?post=7900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}