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Confidential — Sample Report

Independent Valuation of Common Stock

TechCo Inc. — IRC Section 409A Compliance

Valuation Date
September 30, 2026
Report Date
October 5, 2026
Prepared For
Board of Directors
Engagement
DAV-2026-4092

1 Executive Summary

DoAide Valuations ("DoAide" or the "Firm") has been engaged by the Board of Directors of TechCo Inc. ("TechCo" or the "Company") to provide an independent appraisal of the fair market value ("FMV") of TechCo's Common Stock as of September 30, 2026 (the "Valuation Date") for purposes of compliance with Internal Revenue Code Section 409A.

Concluded Fair Market Value per Common Share
$1.42
as of September 30, 2026

This valuation was prepared following the guidelines set forth in the American Institute of Certified Public Accountants (AICPA) Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, and is intended to satisfy the requirements for a "qualified independent appraisal" under Treasury Regulation §1.409A-1(b)(5)(iv)(B).

MetricValue
Total Equity Value (Post-Money)$52,000,000
Common Stock Value (per share)$1.42
Series A Preferred Price (per share)$8.67
Common / Preferred Ratio16.4%
Discount for Lack of Marketability25.0%
Primary MethodologyBacksolve
1 This report is prepared solely for the use of TechCo Inc. and its Board of Directors for IRC §409A compliance. It should not be used for any other purpose without written consent.
Page 1 of 22

2 Company Overview

2.1 Business Description

TechCo Inc. is a Delaware C-Corporation founded in 2023, headquartered in San Francisco, CA. The Company operates a B2B SaaS platform providing AI-powered workflow automation for mid-market companies. TechCo's platform enables customers to automate repetitive business processes, reducing operational costs by an estimated 30–40%.

2.2 Stage of Development

As of the Valuation Date, TechCo is a post-Series A company with approximately 18 months of operating history since commercial launch. The Company has achieved notable traction with $3.2M in ARR (annualized as of Q3 2026), growing at approximately 15% month-over-month.

2.3 Recent Milestones

  • Closed $12M Series A in March 2026, led by Summit Ventures at a $40M pre-money valuation ($52M post-money)
  • Reached $3.2M ARR with 85 enterprise customers
  • Net Revenue Retention (NRR) of 135%
  • Team expanded to 42 full-time employees across engineering, sales, and operations
  • Signed strategic partnership with a Fortune 500 systems integrator

2.4 Capitalization Summary

Security ClassShares% OwnershipKey Terms
Common Stock — Founders4,000,00033.3%4-year vest, 1-year cliff
Common Stock — Employees800,0006.7%ISO/NSO, various grants
Option Pool (unissued)1,815,60015.1%Reserved for future grants
Series Seed Preferred1,600,00013.3%1x non-participating LP
Series A Preferred3,784,40031.5%1x non-participating LP
Total Fully Diluted12,000,000100.0%—
2 Share counts reflect the fully diluted capitalization, including all outstanding options and unissued pool. Series Seed was raised at a $8M pre-money valuation in Q2 2024.
Pages 2–4 of 22

3 Economic Analysis

3.1 Macroeconomic Conditions

As of Q3 2026, the U.S. economy continues its moderate growth trajectory. The Federal Reserve has maintained its benchmark rate at 4.25–4.50%, with two cuts anticipated in Q4. Venture capital funding in B2B SaaS has rebounded from 2023 lows, with median Series A round sizes stabilizing around $12–15M.

3.2 Industry Overview

The AI-powered workflow automation market is projected to reach $18.4B by 2028, growing at a CAGR of 28.3%. Key tailwinds include enterprise AI adoption acceleration, labor cost pressures, and increasing platform maturity enabling non-technical users to build automations.

3.3 Comparable Public Companies

CompanyEV/Revenue (NTM)Revenue GrowthGross Margin
UiPath (PATH)7.2x14%82%
Workato (Private Comp.)12.5x35%78%
Zapier (Private Comp.)15.8x28%85%
ServiceNow (NOW)14.1x22%79%
Monday.com (MNDY)11.3x26%89%
Median12.5x26%82%

3.4 Comparable Transactions

Recent M&A transactions in the workflow automation space show median EV/Revenue multiples of 10–14x for companies with $3–10M ARR and growth rates exceeding 100% YoY. Key transactions reviewed include the acquisitions of Tray.io, Automate.io, and several undisclosed bolt-on deals by larger platform companies.

3 Public comparable data sourced from S&P Capital IQ as of September 30, 2026. Private company multiples are estimated based on last reported funding rounds and may not reflect current market conditions.
Pages 5–8 of 22

4 Valuation Methodology

In accordance with AICPA guidelines, we applied two equity allocation methodologies to derive the per-share value of TechCo's Common Stock:

MethodWeightRationale
Backsolve Method75%Recent arm's-length Series A provides strong market evidence
Option Pricing Model (OPM)25%Cross-check; captures optionality of equity classes

4a. Backsolve Method (Primary — 75% Weight)

The Backsolve Method derives the total equity value by working backward from the most recent arm's-length transaction—TechCo's Series A round closed March 2026. The Series A investors purchased 3,784,400 shares of Series A Preferred at $8.67 per share, implying a post-money equity value of $52,000,000.

Key Assumptions:

ParameterValue
Implied Equity Value$52,000,000
Expected Time to Liquidity4.0 years
Risk-Free Rate4.15%
Equity Volatility55.0%
Dividend Yield0.0%
Common Value per Share (pre-DLOM)$1.89

The volatility estimate of 55.0% was derived from the median annualized equity volatility of comparable public companies, adjusted upward for TechCo's smaller size and earlier stage. The expected time to liquidity of 4.0 years reflects management's current expectations for a potential exit via M&A or IPO.

4b. Option Pricing Model (Secondary — 25% Weight)

The OPM treats each equity class as a call option on the total equity value with varying strike prices based on liquidation preferences and participation rights. This method is particularly useful when the cap table includes multiple classes with different economic rights.

BreakpointEquity ValueClass Receiving Value
$0 – $4.0M$4,000,000Series Seed (1x LP: $4.0M)
$4.0M – $36.8M$32,800,000Series A (1x LP: $32.8M)
> $36.8MRemainingPro-rata to all (as-converted)
ParameterValue
Total Equity Value$52,000,000
Volatility55.0%
Time to Liquidity4.0 years
Risk-Free Rate4.15%
Common Value per Share (pre-DLOM)$1.92

4c. Weighted Conclusion (Pre-DLOM)

MethodValue/ShareWeightWeighted Value
Backsolve$1.8975%$1.42
OPM$1.9225%$0.48
Weighted Pre-DLOM Value—100%$1.90
4 The OPM utilizes a Black-Scholes framework with breakpoint analysis. Volatility is estimated using a peer-set analysis of comparable public companies at similar revenue scales.
Pages 9–14 of 22

5 Discount for Lack of Marketability

Common shares of private companies cannot be readily sold in a public market. We quantify this illiquidity discount using two independent approaches.

5.1 Protective Put Method (Chaffe)

The Protective Put Method models the DLOM as the cost of purchasing a hypothetical put option to hedge against the illiquidity of the common shares. Using the Black-Scholes model:

ParameterValue
Stock Price$1.90
Strike Price$1.90
Volatility55.0%
Time to Liquidity4.0 years
Risk-Free Rate4.15%
Put Option DLOM28.6%

5.2 Restricted Stock Studies

We also referenced empirical restricted stock studies, which analyze the price discounts at which restricted securities of public companies trade relative to their freely tradable equivalents:

StudyAvg. DiscountMedian Discount
FMV Restricted Stock Study (2020)21.0%18.5%
Stout Restricted Stock Study (2019)17.8%15.2%
Pluris DLOM Database (2024)24.3%22.1%

5.3 DLOM Conclusion

Considering the put option analysis (28.6%), the restricted stock studies (median range of 15–22%), and TechCo's specific risk factors (early stage, limited trading history, contractual transfer restrictions), we conclude a DLOM of 25.0%.

Applied DLOM
25.0%
Reflects illiquidity, contractual restrictions, and information asymmetry
5 The DLOM is applied to the weighted pre-DLOM value of common stock. Factors considered include time to expected liquidity, company volatility, transfer restrictions, and the absence of a secondary market.
Pages 15–17 of 22

6 Conclusion & Recommended Strike Price

Based on our analysis using the Backsolve Method (75% weight) and OPM (25% weight), with the application of a 25.0% DLOM, we conclude the following fair market value for TechCo's Common Stock:

ComponentValue
Weighted Pre-DLOM Value per Common Share$1.90
DLOM Applied(25.0%)
DLOM Dollar Impact($0.47)
Fair Market Value per Common Share$1.42
Recommended Strike Price for Stock Option Grants
$1.42
per share of Common Stock, as of September 30, 2026

Validity Period: This valuation is valid for 12 months from the Valuation Date, or until a material event occurs (e.g., new equity financing, significant change in business fundamentals, or pending M&A transaction), whichever comes first.

Limiting Conditions: This report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP) and the AICPA Practice Aid. The opinion expressed is subject to the assumptions, limiting conditions, and qualifications described herein.

Pages 18–19 of 22

7 Exhibits

Exhibit A — Cap Table Waterfall Analysis

The following waterfall illustrates value distribution at various exit values, demonstrating the impact of liquidation preferences on Common Stock value.

Exit ValueSeries ASeries SeedCommonCommon/Share
$20,000,000$16,000,000$4,000,000$0$0.00
$40,000,000$32,800,000$4,000,000$3,200,000$0.48
$52,000,000$16,380,800$6,933,333$28,685,867$4.34
$75,000,000$23,637,500$10,000,000$41,362,500$6.26
$100,000,000$31,516,667$13,333,333$55,150,000$8.35
$200,000,000$63,033,333$26,666,667$110,300,000$16.70

6 At exit values below $36.8M, preferred shareholders receive their full liquidation preferences before common holders receive any value. At $52M (current value), preferred holders elect to convert to common, sharing pro-rata.

Exhibit B — Option Pricing Model Output

BreakpointLowerUpperCall Value (Lower)Call Value (Upper)Incremental
Tranche 1$0$4.0M$52.00M$48.72M$3.28M
Tranche 2$4.0M$36.8M$48.72M$24.18M$24.54M
Tranche 3>$36.8M∞$24.18M$0$24.18M
Total Equity Value$52.00M
AllocationValueSharesPer Share
Series A Preferred$21,148,0003,784,400$5.59
Series Seed Preferred$6,832,0001,600,000$4.27
Common Stock (incl. pool)$24,020,0006,615,600$3.63
Less: Option Pool Discount($11,292,480)——
Common per Share (pre-DLOM)—4,800,000$1.92

Exhibit C — Comparable Company Detail

CompanyMkt Cap ($M)Revenue ($M)EV/RevGrowthEBITDA Margin
UiPath (PATH)$8,420$1,1687.2x14%8%
ServiceNow (NOW)$178,500$12,65014.1x22%30%
Monday.com (MNDY)$12,800$1,13311.3x26%12%
Celonis (Private)$13,000*$800*16.3x32%N/A
Automation Anywhere (Private)$6,800*$580*11.7x18%N/A
Median$12,800$1,13311.7x22%12%

7 Asterisk (*) denotes estimated values based on most recent funding rounds and/or press reports. Private company data is inherently less reliable than public market data and is used for reference only.

Pages 20–22 of 22

What's in a 409A Valuation Report?

📊

Executive Summary

The headline: your company's fair market value per common share, the valuation date, and the key conclusion your board needs to set option strike prices.

🏢

Company Overview

A snapshot of your business—stage, industry, recent milestones, revenue metrics, and a full cap table breakdown showing all share classes and their terms.

📈

Economic Analysis

Market context matters. This section covers macro conditions, industry trends, comparable public companies, and relevant M&A transactions.

⚖

Valuation Methodology

The math behind the number. Most reports use 2–3 methods (Backsolve, OPM, PWERM) with full assumptions disclosed—volatility, time to liquidity, risk-free rate.

🔒

DLOM Analysis

Private shares can't be easily sold. The Discount for Lack of Marketability quantifies this using put option models and restricted stock studies. Typically 15–35%.

✅

Exhibits & Supporting Data

The backup: cap table waterfalls showing payouts at different exit values, OPM breakpoint analysis, comparable company data tables, and methodology citations.

Frequently Asked Questions

A 409A valuation report includes an executive summary with the concluded fair market value, a company overview, economic and industry analysis, detailed valuation methodology (typically Backsolve and/or OPM), a Discount for Lack of Marketability (DLOM) analysis, and supporting exhibits including cap table waterfalls and comparable company data. You can see all these sections in the sample report above.

A typical 409A report ranges from 20 to 40 pages. Pre-seed and seed-stage companies with simple cap tables tend toward shorter reports (15–20 pages), while later-stage companies with complex multi-class structures, multiple methodologies, and extensive comparable analysis may run 35–45 pages.

IRC Section 409A requires a new valuation at least every 12 months, or after any "material event" such as a new funding round, significant revenue milestone, pivot, or potential M&A discussion. Most startups issuing options regularly get updated valuations every 6–12 months. If you're issuing options within 90 days of a material event, you likely need a new valuation.

The most common methods are the Backsolve Method (working backward from a recent funding round), the Option Pricing Model or OPM (treating each share class as a call option), and the Probability-Weighted Expected Return Method or PWERM (modeling different exit scenarios). Post-Series A companies typically use Backsolve as primary with OPM as a cross-check. Pre-revenue companies may use the Current Value Method (CVM).

DLOM reflects the reduced value of private company shares compared to freely tradable public shares. Since private shares can't be easily sold on an open market, they're worth less than equivalent publicly traded shares. Common approaches to quantify DLOM include the Protective Put Method (Chaffe model), the Asian Put Method (Finnerty model), and empirical restricted stock studies. Typical DLOMs for venture-backed startups range from 15% to 35%.

The last round price is the price per share of preferred stock, which carries additional rights (liquidation preference, anti-dilution, board seats). Common stock lacks these protections, so it's worth less. Additionally, the DLOM reduces the value further because common shares have no liquid market. A typical common-to-preferred ratio for Series A companies is 15–25%.

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