Growth Stage & Pre-IPO 409A Valuation

Growth stage and pre-IPO 409A valuations are the most comprehensive and complex engagements, requiring full enterprise valuation methodology, IPO scenario modeling, and tight coordination with investment bankers and auditors preparing for a public offering or major liquidity event.

Published April 20, 2026

3 min read

Key Takeaways

Pre-IPO 409A valuations coordinate with your S-1 preparation and banker process

PWERM IPO scenario modeling is the dominant methodology

The common stock discount narrows significantly as IPO probability increases

Auditors will perform the most rigorous 409A review at this stage

Ongoing retainer arrangements are available for frequent revaluations

Partner-led engagements ensure senior professional oversight throughout

Growth Stage and Pre-IPO 409A Valuation

For companies with $100M+ in ARR targeting a public offering, the 409A valuation becomes one of the most scrutinized documents in your financial reporting process. It feeds directly into your S-1 financial statements, affects the SBC expense disclosed to public market investors, and is reviewed by the SEC as part of the IPO comment process.

S-1 and SEC Considerations

The SEC reviews stock-based compensation in S-1 filings carefully. Specifically, they look at grants made in the 12–18 months before the IPO price is set and compare those grant prices to the IPO price. A large gap between 409A strike prices and IPO price attracts SEC comments and can delay your offering.

Best practices for pre-IPO companies:

Conduct 409A valuations at least quarterly in the 12 months before the IPO roadshow
Ensure the 409A methodology anticipates the IPO scenario with appropriate probability weighting
Coordinate your appraiser with your IPO bankers to ensure consistent valuation narratives
Document all material events between valuations to demonstrate a continuous, reasonable FMV progression

409A and the IPO Process

During the IPO process, there are typically two relevant 409A engagements:

Pre-S-1 filing: A comprehensive 409A that will be disclosed in the financial statements and reviewed by auditors and the SEC
Quiet period updates: Monthly or quarterly revaluations during the roadshow period to support any new option grants to employees joining during the IPO preparation

Ongoing Retainer Arrangements

At the growth stage, many companies benefit from an ongoing retainer with their 409A appraiser — a fixed annual fee that covers multiple valuations per year, quarterly updates, and access to the appraiser for ad-hoc questions about equity compensation, secondary transactions, and tender offer pricing.