- A 409A Valuation is valid for 12 months from the date it was completed.
- You need a new valuation before issuing additional stock options once the 12 months are up.
- A material event, like closing a new financing round, also requires a fresh 409A, regardless of when the last one was completed.
The 12-month rule is the baseline. If your last 409A was completed in January 2025 and you want to issue options in February 2026, you need a new valuation first. The prior one has expired.
Material events reset the clock before the 12 months are up. A material event is anything that would significantly change the fair market value of your common stock: closing a priced financing round, entering into or completing an acquisition, achieving a significant change in revenue or operations, or entering into discussions that could result in a change of control. When any of those things happen, the prior 409A is considered stale and a new one is required before issuing additional grants.
Most venture-backed companies need a 409A at least once a year, and often twice: once for the annual refresh and once after a funding round. The timing matters most when you are planning option grants. If you are approaching the 12-month expiry of your current 409A and have grants to issue, start the renewal process before the current one expires.
One practical scenario founders often ask about: what if your 409A expires while you are mid-hire and an offer letter with options is pending? The answer is to pause the grant until the new 409A is in place, or use the prior valuation if the grant date falls before expiry. Issuing grants on an expired valuation carries the same compliance risk as issuing without one.
Stress-free 409A Valuation renewals.
Cake keeps everything your next valuation needs in one place. With Cake, you can:
- Initiate a renewal directly from your account when your 409A approaches its 12-month expiry.
- Keep your valuation history stored alongside your cap table, so nothing gets lost between renewals.
- Work with the same qualified valuators: CFA, CVA, and CPA professionals with 10,000+ valuations completed.
- Get a draft valuation in 3 business days, included with your subscription.
See how Cake's 409A valuation works.
This article is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.
.avif)
