How Value8 Handles 409A Valuations

The service model: done-for-you, not self-serve

Value8's 409A offering is a done-for-you appraisal service, not a self-service valuation tool a customer runs themselves. The customer submits a request through a guided wizard; Value8 prepares the final signed report for you: appraisers perform the valuation using an internal engine and deliver a formal report, typically within 48 hours of a complete submission. This distinction matters for accuracy: Value8 is not positioning its cap table customers as doing their own 409A math. Value8's appraisers do, and the customer receives a defensible, appraiser-signed FMV, not a calculator output.

The request workflow

Inside Ledger (Valuations → 409A Management), a customer opens a request wizard with these steps: Business DNA, Senior Management, Financial Pulse, Exit Matrix, then Review & Submit. Each step auto-saves, so a draft can be left and resumed. On submission, the request enters Value8's appraisal queue.

Because the requesting company already runs its cap table, option grants, and financing history in Ledger, most of the request is pre-filled: there's no separate onboarding or data hand-off to a third-party appraiser. The customer tracks request status (draft, submitted, in review, needs info, completed, or cancelled) from the same page.

The valuation engine

Value8's backend implements the standard two-layer 409A methodology described in the pillar article, as deterministic calculation modules that can be independently verified:

• Valuation synthesis engine: blends multiple valuation approaches (e.g., DCF, public comparables, asset-based) by weight into a single consolidated enterprise value, then nets out debt to reach total equity value. The same calculation engine underpins Value8's valuation work more broadly.
• OPM hybrid backsolve engine: prices the cap table's liquidation waterfall as a series of Black-Scholes call-option breakpoints, blends a near-term and a long-term liquidity scenario using probability weights, and backsolves so the model matches a known reference price (typically the latest priced round). Common stock is identified from the cap table's recorded class type, not guessed from security names.
• DLOM models: four published discount-for-lack-of-marketability models (Chaffe protective put, Finnerty average-strike, Ghaidarov average-strike, Longstaff lookback put), each returning its own discount percentage; the four can be concluded into a single defensible discount by simple average or custom weighting.
• Market Data Engine (Valuations → Market Data Engine in Ledger): supplies the risk-free rate (U.S. Treasury 2Y/5Y/10Y/30Y curve, with the 10Y as the typical risk-free input) and peer-group volatility/beta that feed the OPM and DLOM calculations, snapshotted and dated so every valuation's inputs are traceable.

PWERM (probability-weighted expected returns method) is standard industry terminology, mentioned for completeness in the pillar and FAQ content as a method some appraisers use. Value8's engine does not use PWERM; its probability weighting is between near-term and long-term scenarios within the OPM backsolve, not a full discrete-outcome PWERM model.

The deliverable

The completed valuation is delivered as a formal report that includes a cover letter, the ASC 820 fair-value / IRS Revenue Ruling 59-60 definition of value, sources of information relied upon, a statement of limiting conditions, an appraisal certification, company overview, capital structure and financing history, rights and preferences, the valuation methodology and approach weighting, a dedicated section on the Hybrid OPM Backsolve application (near-term scenario, long-term scenario, probability-weighted results, breakpoint analysis), the DLOM analysis, and the appraiser's bio and credentials.

The resulting FMV is then recorded as a dated entry in the company's FMV history (Reports & Compliance → Fair Market Value), and new option grants reference the latest valid entry, so a current, on-file 409A is a prerequisite the product surfaces before granting options.

Downstream integration: ASC 718 expense

Because the 409A FMV, the cap table, and the ASC 718 stock-based-compensation engine live in the same system (Ledger), the FMV an appraisal produces feeds directly into the fair-value option-pricing inputs (Black-Scholes assumptions, snapshotted per grant) used for quarterly expense recognition, without re-entering the figure in a separate accounting tool. This is the same "no re-entry" principle Value8 applies across its cap-table-to-compliance pipeline generally (Form 3921, Section 83(b), Section 102, securities-compliance monitors).

Audit-readiness and independent verification

The OPM backsolve and DLOM calculation modules are independently verified: expected outputs are drawn from a valuation-lead-signed reference model, an independently maintained benchmark not derived from the engine being tested, and the live production calculations are checked against those reference values. This is a genuine engineering control over calculation accuracy, and it's fair to describe Value8's valuation engine as independently verified.

It is, however, an internal engineering control, not a customer-facing audit deliverable in itself: a customer or auditor receives the delivered report and its sources/methodology sections as the audit evidence for a given valuation, not the internal test fixtures or reference benchmark used to verify the engine.

What this page does not claim

• Value8 does not claim its customers perform their own 409A math. The appraisal is performed by Value8's appraisers, using the engine described above, and delivered to the customer as a final signed report within 48 hours of a complete submission.
• No claim is made here about pricing or guaranteed IRS acceptance; those are commercial/legal statements outside this page's scope (see pricing).
• PWERM is not claimed as a Value8 method; see above.
• "Independently verified" describes the engine's internal testing control, not a document a customer or auditor receives directly; the audit evidence a customer holds is the delivered report itself.