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Stock Options and Share-Based Payments

Your business can rely on our valuation services to help you understand stock options and share-based payment arrangements

Compliance with SFAS 123R/ASC 718 (as well as IRC 409A) can be a tricky issue for many organizations, especially those which are privately held. However, with the increasing popularity (and complexity) of share-based payment arrangements, it is an arena in which an increasing number of firms find themselves participating. Recent accounting literature, pronouncements, and interpretations have lifted the cover on the concept of stock option price fair value, and continued exclusive reliance upon such formerly tried-and-true methods as the Black-Scholes valuation model may put firms at risk.

Plante Moran’s valuation professionals understand stock options and the regulatory environment surrounding them. We can help clients answer and understand the difficult questions, including: 

  • When is it appropriate to rely upon a Black-Scholes stock option valuation model versus a more complex lattice or binomial model? 
  • How do I determine the per share fair value of a privately held company for compliance with IRC 409A? 
  • How does a privately held firm determine the appropriate inputs for stock option valuation models? 
  • How does a complex capital structure impact the value of stock options? 
  • How often do I need to have existing stock options revalued? 
  • How does a public company with a short trading history determine the appropriate volatility for use in valuation models?

Compliance requires different measures and steps for different organizations, depending upon a number of factors. Plante Moran’s valuation services team offers comprehensive stock option and share-based payment valuation services that cover the entire spectrum of potential solutions, ranging from entity valuation, capital structure analysis, and option warrant valuation for private companies to volatility analysis for public companies.