Services
Cheap Stock Valuation
Short Description:
To avoid a cheap stock charge, it is important to support each option grant by obtaining a contemporaneous valuation from an independent valuation specialist.
Cheap stock refers to the issuance of an equity security (e.g. options, warrants, common stock or restricted stock), during the 12 months preceding an IPO for a price (or with a strike price) that is below the expected IPO price. Typically this issue arises in connection with the granting of employee stock options. To avoid a cheap stock charge, it is important to support each option grant by obtaining a contemporaneous valuation from an independent valuation specialist.
We provide valuations of cheap stock in accordance with the allocation methods outlined in the AICPA Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation.”