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Market Conditions and Their Impact on 409A Startup Valuation Market conditions heavily influence 409A startup valuations by shaping investor sentiment, comparable company data, and risk assessments. In strong markets, higher demand and favorable funding trends can boost fair market value. In downturns, reduced capital availability, lower comparables, and elevated risk perceptions typically decrease valuations, making assumptions more conservative and scrutiny more rigorous. https://medium.com/@409avaluations/market-conditions-and-their-impact-on-409a-startup-valuation-72192839d068

Legal and Tax Risks of Skipping 409A Valuation for Startups Skipping a 409A valuation exposes startups to significant legal and tax risks. Without a defensible fair market value, the IRS may classify stock options as discounted, triggering penalties, back taxes, and interest for employees. It can also undermine compliance, complicate fundraising, weaken investor confidence, and create long-term financial and operational liabilities for the company. https://www.ganjingworld.com/news/1i9q8d47qf56OBdPNMANnGSuW1tj1c