Methods & Standards
Multiple methods. Allocation engines. DLOM models.
One analytical engine produces every report. The platform runs multiple valuation methods in parallel, hybrid-weights them into a single concluded value, allocates across the cap table, and applies a marketability discount — for 409A, ASC 820, ASC 718, and international standards alike.
Built on the AICPA Practice AidReviewed by the Zimbs Valetex valuation teamReproducible to the cent
Valuation methods
Multiple methods, hybrid-weighted to one conclusion
Each method runs independently with full inputs and intermediate exhibits. The analyst assigns percentage weights; the platform computes a single Weighted Indicated Equity Value, reproducible to the cent.
Discounted Cash Flow
Full WACC build — CAPM with Hamada re-levering, Duff & Phelps / Kroll size premium, company-specific and country-risk premia, and MROUND rounding — plus two terminal-value methods (Gordon growth and exit multiple) and TCJA two-bucket NOL, with an automatic 2-D sensitivity grid.
Guideline Public Company
Live Capital IQ comparables via the in-product Explorer. All revenue & EBITDA multiples (LFY/LTM/NFY) computed automatically with mean, median, harmonic, and percentile aggregation.
Guideline Transactions / M&A
Deal comparables on the same statistical framework as GPC, with optional recency weighting and an implicit control premium captured against the GPC spread.
OPM Backsolve
Black-Scholes inversion against the full preference stack with automatic breakpoint construction, solving for the implied equity value that reconciles a recent priced round — including Sandwich mode, which treats preferred-stock warrants as deterministic exercise events.
Post-Money Method
Recent round post-money taken as fair value, with treasury-stock-method treatment — a clean sanity check or primary indication for early-stage companies.
Allocation engines
Three engines, hybrid-weighted across the cap table
OPM, CVM, and CSE run in parallel against the concluded equity value and merge into one per-security allocation table, with the weights persisted as auditable data.
Option Pricing Model
Black-Scholes per-class allocation across the full preference, participation, and conversion waterfall — automatic breakpoints, per-share and ownership outputs.
Current Value Method
Deterministic liquidation waterfall in strict seniority order — the right method for near-term-exit or distressed contexts.
Common Stock Equivalent
Fully-diluted, common-equivalent allocation — a clean treatment for mature structures and a useful cross-method sanity check.
DLOM methodologies
Four marketability-discount models
Applied company-wide or per share class — with optional class-specific volatility derived via Merton elasticity from the OPM breakpoints, producing a defensible per-class DLOM.
Protective Put (1993)
European put representing the cost of illiquidity over the holding period.
Average-Strike Put (2012)
Asian-style average-strike put — more conservative than Chaffe.
Geometric Asian Put
Geometric-averaging adjustment capturing path dependence in the expected exit.
Restricted-Stock Studies
Empirical benchmark (median ≈ 27%) when volatility-based inputs are unreliable.
Reporting standards
One engine, every jurisdiction
In the US the deliverable is a 409A, ASC 820, or ASC 718 report. In India and the rest of the world, it's an Indicated Value report — same methodology, multi-currency and multi-jurisdiction. 409A is one report among several, never the whole story.
409A Fair Market Value
IRS-compliant fair market value for employee stock options, with a locked finalization for tax-defense posture.
Learn moreFair Value Measurement
Level 1/2/3 fair value for financial reporting, fund NAV, and LP reporting — market-participant inputs via Capital IQ.
Learn moreStock-Based Compensation
Employee stock-option plan (ESOP) expensing and grant-level fair value for compensation accounting.
Learn moreIndicated Value report
Outside the US, the same engine produces an Indicated Value report — multi-currency and multi-jurisdiction, for CAs, advisors, and finance teams in India and around the world.
Learn moreWorked example
From multiple methods to one per-share fair value
A late-stage engagement weights the methods into a single concluded value, then blends the allocation engines into one per-share number — every weight persisted and reproducible to the cent.
1 · Hybrid weighting across methods
| Method | Indicated equity value | Weight | Weighted contribution |
|---|---|---|---|
| DCF | $120,000,000 | 40% | $48,000,000 |
| GPC (Median EV/Revenue, NFY) | $135,000,000 | 30% | $40,500,000 |
| GTM (Median EV/EBITDA, LTM) | $140,000,000 | 20% | $28,000,000 |
| Backsolve (Series C anchor) | $128,000,000 | 10% | $12,800,000 |
| Weighted Indicated Equity Value | 100% | $129,300,000 |
2 · Hybrid allocation across engines (common stock)
| Allocation method | Weight | Common per-share | Common total |
|---|---|---|---|
| OPM | 50% | $8.40 | $67.2M |
| CVM | 30% | $6.10 | $48.8M |
| CSE | 20% | $12.93 | $103.4M |
| Weighted result (pre-DLOM) | 100% | $8.70 | $69.6M |
A marketability discount (DLOM) is then applied on top to reach the final, per-class fair value per share.
Standards alignment
Built to the standards your auditor uses
| Standard / guidance | How the platform aligns |
|---|---|
| AICPA Practice Aid | All recommended market, income, and option-pricing methods, with hybrid weighting consistent with the stage-of-development framework. |
| ASC 820 — Fair Value Measurement | Market-participant inputs via Capital IQ, three-level hierarchy disclosure, and a Minority / Non-Marketable conclusion basis. |
| IRC §409A | Dedicated 409A workspace and report template, with irreversible finalization for a tax-defense posture. |
| IPEV Guidelines | Multi-period support and a recurring valuation cadence aligned with international fair value reporting. |
| AICPA Restricted-Stock & Pre-IPO Studies | Empirical DLOM methodology bundled as a benchmark alongside the model-based discounts. |
Frequently asked questions
What valuation methods does the platform support?
The platform supports multiple enterprise/equity valuation methods — Discounted Cash Flow (DCF), Guideline Public Company (GPC), Guideline Transactions/M&A (GTM), OPM Backsolve (including Sandwich mode), and the Post-Money method. Each method runs independently and is combined through percentage-based hybrid weighting into a single Weighted Indicated Equity Value.
What allocation methods and DLOM models are available?
Equity value is allocated across the cap table using the allocation engines — the Option Pricing Model (OPM), the Current Value Method (CVM), and the Common Stock Equivalent (CSE) method — which can be hybrid-weighted. Marketability is then discounted using DLOM methodologies: Chaffe (protective put), Finnerty (average-strike put), Longstaff (geometric Asian put), and empirical restricted-stock studies, applied company-wide or per share class.
Which reporting standards does the platform cover?
In the United States, the platform produces audit-defensible reports for IRC §409A (fair market value), ASC 820 (fair value measurement), and ASC 718 (stock-based compensation / ESOP). For India and the rest of the world, the same engine produces an Indicated Value report — multi-currency and multi-jurisdiction. It is built on the AICPA Practice Aid from first principles.
Is a 409A valuation just one of these standards?
Yes. A 409A valuation is one reporting output of the same analytical engine. The platform applies the same multiple methods, allocation engines, and DLOM models to produce 409A, ASC 820, ASC 718, and international reports — so 409A is one standard among several, not the whole product.
See the methodology in action
Book a walkthrough to see the full engine run on a representative engagement — every input structured, every weight reproducible.