A chapter from "The Entrepreneur's Roadmap: From Concept to IPO"
Valuation of various equity classes issued by an enterprise, sometimes within a complex capital structure, can be a daunting but necessary exercise for a private company when certain key milestones occur (e.g., exploring another round of financing or granting share-based compensation to employees) or for meeting tax and financial reporting requirements. We will offer a thorough explanation of the valuation process and describe the key features of various instruments commonly encountered when valuing equity classes within a complex capital structure. This article is not intended to provide specific accounting or tax guidance. Moreover, given the complexities involved, this article will focus on the overall goal and intent of the valuation techniques versus extensive discussion on option theory or nuances underlying the approaches.
>> For more on this topic, download the full chapter: 409A Valuations and Other Complex Equity Compensation Issues
Anthony Doughty, CFA, Managing Director
Michael Notton, CFA, CPA, Senior Manager
Successful entrepreneurs don’t repeat other people’s mistakes. They learn from them. And then they adapt their strategy and roadmap accordingly. But accessing the best advisors, talent and experiences isn’t easy. And if you are a CEO, CFO, Controller or Founder responsible for growing a private company, you may not have the time – or the connections – to get the full picture.
KPMG, in collaboration with the New York Stock Exchange (NYSE) and additional contributors, have developed The Entrepreneur’s Roadmap: From Concept to IPO. This guide is designed to help entrepreneurs by offering critical insights from concept to taking a company public and gain an understanding of both the benefits and challenges through each stage.