We are going to hire our first sales rep (and that will be our first employee). We are going to offer the sales rep some equity. Do we need to do a 409A valuation?
Questions
Do we need to do a 409A valuation before offering equity to our first employee ?
4 answers from the community
A· Sep 28, 2015
No. Waste of time and resources at this stage.
A· Sep 28, 2015
Get a lawyer, this is not a good question for the anonymous internet.
A· Sep 29, 2015
If you don't have a lawyer make sure you find one that is willing to give things to you in plainspeak. Otherwise I'll save you the $300 and give you the answer you're likely to hear: "technically you should".
Many attorneys will not budge other than that that statement - you might get more legal jargon on why "technically" you should but it will go over your head - as they are just covering their ass.
A· Sep 30, 2015
If you offer options - yes. If you offer RSAs (Restricted Stock Awards), no. When you have a meaningful valuation, you should do options. Early on, RSAs work very nicely.