6 SureFire Negotiating Strategies to Getting the Lowest Defensible 409A Strike Price
Congratulations on downloading this insider's guide to getting the lowest possible strike price!
We are confident that this will be helpful to you because before starting Capshare we started
and sold a company called Scalar which has grown into one of the largest privatecompany
valuation firms in the country.
We performed literally thousands of 409A valuations at Scalar.
Before we get into the details, it is important to lay some groundwork that will help you to
negotiate with your valuation firm. Don't skip this section because if you do, you will likely make
some costly mistakes.
Groundwork: How Valuation Firms Think About the Strike Price
Valuation firms are worried about giving you too low of a strike price. Doing so increases their
risk with auditors and the IRS. They really want to avoid that.
So the first piece of advice is this: Give the valuation firm data that will justify a lower strike
price.
When we were running Scalar, we can't tell you how many times we got on calls with frustrated
customers who wanted a lower strike price.
