
Ask HN: Are eshares' 409a valuations independent and able to withstand audits? - Dawoodi
Advice would be really appreciated on this.<p>We need to do a 409A valuation. Our lawyers, a large valley firm, said to not use eshares. Evidently, they changed the firm who was doing those outsourced valuations for them (it used to be preferred return and then greener equity) and couldn’t give a sufficient answer that they were independent. And this could present issues in DD from investors but also IRS down the road. In a worse case scenario, options strike prices will have to be re-done with tax implications.<p>Anyone have similar feedback or thoughts on this? Is it OK to use eshares prior to Series B and then switch over to something more robust?  To make things more complicated, we need to do options and then a raise within a few months of each other so it would be nice to not waste a ton on this if we don&#x27;t have to.
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tmclaughlin
(Full disclosure - I lead the valuations team at eShares)

The question of audit defensibility is ultimately the only question that
matters in a valuation. Our goal (as is the goal of other providers) is
singular - to deliver a valuation that will withstand Big Four audit and that
utilizes the most applicable valuation methodologies for the situation.

Here's how we at eShares specifically have approached that:

1) One of our first hires on the team joined from a Big Four firm as a former
409A auditor

2) We actually built our product to anticipate audit - we provide a full
valuation report in addition to all of the financial models and valuation
models (with formulas still intact) to make the inevitable audit a much
smoother and transparent process. (We actually post our models and reports for
the world to audit as well on our website:
[http://esharesinc.com/409a](http://esharesinc.com/409a))

We took the black box out of valuations and replaced it with fully transparent
valuations models that backs up every output that shows up in your valuation
report. In our opinion, this makes a much stronger case.

As the largest provider of 409A valuations in the country at eShares, if we
couldn't stand up to audit, we would have been out of business by now. We've
worked with companies from pre-Seed stage to post Series E, pre-acquisition
and pre-IPO.

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tl;dr

1) Our team includes former 409A Big Four auditors, we've been audited and
have never failed, and we deliver an audit-friendly valuation package with
intact models instead of just a report.

2) eShares does more valuations than any other firm in the country (~200 this
month alone). At that volume, we simply must be correct every single time.

3) We've applied our engineering team and the power of software to financial
valuations. The quality is the same if not better than any other provider, but
our valuation and audit process is just much more efficient and less costly
for you

Just as stock brokers still exist after eTrade came along, 409A valuations
firms will exist after eShares. But for those that do their valuation with us,
we think it's a better (and certainly less costly) product and experience.

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henward0
I recommend finding a better law firm.

