Why Preparation Matters
The single biggest driver of 409A delays is incomplete data submission. Most standard 409A engagements (Pre-Seed through Series A) can complete in 5–7 business days from the moment the appraiser has everything they need. But the same engagement can take 3–4 weeks when documents trickle in piecemeal. Preparing everything in advance not only saves time — it often saves money on rush fees you would otherwise need to pay.
The Complete 409A Preparation Checklist
Financial Documents
- Profit & Loss statement — trailing 12 months, monthly breakdown
- Balance sheet — most recent available (within 60 days of valuation date)
- Cash flow statement — trailing 12 months
- ARR or MRR schedule — if subscription business, by month for the trailing 12 months
- Customer revenue breakdown — top 10 customers by revenue (approximate is fine)
- Financial projections — 3-to-5-year annual model (even high-level is valuable)
- Historical revenue by quarter — at least 2 years if available
Cap Table and Equity Documents
- Fully diluted cap table as of the valuation date — Carta export preferred
- All share classes: common, seed preferred, Series A/B/C preferred (each separately)
- All outstanding options: granted, exercised, forfeited, expired — with strike prices and vesting schedules
- All outstanding warrants: holder, shares, exercise price, expiry
- All convertible instruments: amount outstanding, interest rate, cap, discount, pro-rata rights
- Size of unissued option pool (authorised but not granted)
Funding Round Documents
- Most recent term sheet or stock purchase agreement
- Preferred stock terms: liquidation preference (1× or multiple), participating vs non-participating, anti-dilution type
- Price per preferred share for each round and post-money valuation
- Investor rights agreement (information rights, board rights)
- SAFE or convertible note agreements with all terms
Company Overview
- Company pitch deck or executive summary (recent, < 6 months old)
- Business model description: how you make money, who your customers are
- Market size estimate (your numbers, no need for external research)
- Top 3–5 competitors and your key differentiators
- Recent milestones and upcoming planned milestones
- Team size and key executive hires since last valuation
After the Valuation: What to Prepare Next
A 409A report triggers a workflow. Prepare these in advance so you can issue options quickly once the report is delivered:
- Board resolution template: Approving the FMV and authorising option grants at or above that price. Your counsel should have a template.
- Option grant agreements: Individual agreements for each recipient. Carta or similar cap table software generates these automatically.
- Employee communication: A plain-English explanation of the strike price and what it means for each employee's grant.
- 409A report filing: Save the report in your corporate records folder — not just email. Include the board resolution referencing it.
Special Situations: What Else to Provide
| Situation | Additional Documents Needed |
|---|---|
| Company has received an acquisition offer or LOI | LOI terms and offer price (confidential — appraiser bound by NDA) |
| Recent secondary transaction occurred | Terms and price of the secondary sale |
| Company operates internationally | Revenue breakdown by geography; local subsidiary financials |
| Material litigation or IP dispute pending | Summary of dispute and estimated exposure |
| Key man dependency (departure risk) | Brief note on management team stability |