How many types of valuation transactions can I add?

Valuation is an estimation of the present value of the company or an asset, done by independent appraisers. In Ledgy, you can store the data and documents associated with your valuations.

Valuations

Valuation is a process of determining the current (or projected) value of the company or its assets. Depending on the country you are based in, you might need to use different valuations to specify the strike price of your options, option expensing features, or similar. Valuations are given by your local authorities or independent appraisers and can be stored in Ledgy.

Company valuation

Company valuation is used to show stakeholders the value of their investment, and changes after each financing round. The valuation applies across all share classes and changes the representation of your cap table accordingly. If you allowed sharing valuation with your stakeholders, company valuation will change the current value of the grants your employees own, as well as the value of your company for your investors.

To add a company valuation:

  1. On the Ownership > Transactions page click Add transaction button
  2. Selecting Valuation will open the "Valuation" window
  3. Company valuation will be automatically selected in the Valuation type dropdown
  4. Create inputs with the valuation data:
    • Date
    • Price per share
    • Event name - for example, series A
    • Optional: add documents and internal note
  5. Click Save
  6. Publishing changes will adjust your cap table and share the data with your stakeholders

409A valuation (US)

A 409A valuation is an assessment of the fair market value of a private company's common stock by an independent appraiser. It is not shown to your stakeholders explicitly but used to determine the lowest strike price. The lower boundary of the strike price is defined as the fair market value. If options are exercised below that price, the company along with the employee might be subject to tax penalties. 409A valuations are valid for one year unless a material event occurs (such as financing round).

To add a 409A valuation:

  1. On the Ownership > Transactions page click Add transaction button
  2. Selecting Valuation will open the "Valuation" window
  3. Choose 409A from the Valuation type dropdown
  4. Create inputs with the valuation data:
    • Date
    • Price per share
    • Optional: add documents and internal note
  5. Click Save

Note: Documents associated with the 409A valuation can be found in the Data room > Pools > Valuations folder.

Fair value

A fair value, defined by IFRS 2 Appendix A, is the amount for which an equity instrument can be exchanged or transferred between parties. The values given by this valuation are not shared with your stakeholders but only used to create Option Expensing (or Share-Based Payments) reports.

To add a Fair value valuation:

  1. On the Ownership > Transactions page click Add transaction button
  2. Selecting Valuation will open the "Valuation" window
  3. Choose Fair value from the Valuation type dropdown
  4. Create inputs with the valuation data:
    • Date
    • Price per share (spot price)
    • Volatility
    • Risk-free rate
    • Dividend yield
    • Optional: add documents and internal note
  5. Click Save
  6. Now the Option Expensing will use this fair value to calculate the option values

Note: Documents associated with the fair value valuation can be found in the Data room > Pools > Valuations folder.

EMI valuation (UK)

EMI (Enterprise Management Incentive) valuation is not shown to your stakeholders explicitly but used to determine the lowest strike price of the EMI grants. The valuation needs to be requested from the HMRC through the VAL231 form. The lower boundary of the strike price is defined as the actual market value (AMV) of the valuation. EMI options need to be granted before the expiry date of the valuation which is specified on the valuation documentation (most commonly 90 days).

To learn more about EMI limitations and workflows, check the help article on Grant types.

To add an EMI valuation:

  1. On the Ownership > Transactions page click Add transaction button
  2. Selecting Valuation will open the "Valuation" window
  3. Choose EMI valuation from the Valuation type dropdown
  4. Create inputs with data received from the HMRC:
    • Date
    • AMV (Actual Market Value) price per share
    • UMV (Unrestricted Market Value) price per share
    • Valuation expiry
    • Optional: add documents and internal note
  5. Click Save
  6. Publishing changes will adjust your scheme limitations accordingly

Note: Documents associated with the EMI valuation can be found in the Data room > Pools > Valuations folder.

CSOP valuation (UK)

CSOP (Company Share Option Plan) valuation is not shown to your stakeholders explicitly but used to determine the lowest strike price of the CSOP grants. The valuation needs to be requested from the SAV team of the HMRC. The lower boundary of the strike price is defined as the unrestricted market value (UMV) of the valuation. CSOP options need to be granted before the expiry date of the valuation which is specified on the valuation documentation (most commonly 60 days).

To learn more about CSOP limitations and workflows, check the help article on Grant types.

To add a CSOP valuation:

  1. On the Ownership > Transactions page click Add transaction button
  2. Selecting Valuation will open the "Valuation" window
  3. Choose CSOP valuation from the Valuation type dropdown
  4. Create inputs with data received from the SAV team:
    • Date
    • AMV (Actual Market Value) price per share
    • UMV (Unrestricted Market Value) price per share
    • Valuation expiry
    • Optional: add documents and internal note
  5. Click Save
  6. Publishing changes will adjust your scheme limitations accordingly

Note: Documents associated with the CSOP valuation can be found in the Data room > Pools > Valuations folder.