TL;DR
A private company’s 409A valuation report is generally an internal document, with no routine public filing requirement merely because it was prepared. It may nevertheless be shared in diligence, requested by tax authorities, or disclosed in litigation or securities filings. Keeping a report private is not the same as a statutory confidentiality privilege, and it is not a guarantee against access or disclosure.
The short answer: ordinarily private, but designed to be defensible
An independent appraisal is one way to support fair market value for option pricing under Treas. Reg. §1.409A-1(b)(5)(iv); it is not the only permitted method, and obtaining a report does not by itself conclusively establish fair market value. When the independent-appraisal requirements are satisfied, the regulations provide a rebuttable presumption of reasonableness. A privately commissioned report ordinarily remains in company records rather than being routinely filed with a government agency upon completion. Section 409A does not itself create a special confidentiality privilege for the report; engagement terms and applicable legal obligations govern its use and disclosure.
There is no general public registry of private-company 409A reports. A particular report or information from it can become public through another process.
Access depends on the recipient’s role, contractual rights, applicable law, and the reason for requesting the information.
Who sees your 409A valuation
1. Your board of directors
The board or other authorized decision-maker needs support for option pricing and properly documented grant approvals. A valuation may be part of that record. Whether the full report is circulated, and to whom, depends on the company’s process.
2. Your auditor (if you have one)
Auditors may request valuation support for share-based compensation accounting. A common-stock valuation and the accounting fair value of an option award are different measurements; a report prepared for tax purposes does not by itself complete the accounting analysis.
3. Investors during diligence
Investors may request valuation reports and option-grant records in diligence. The common-stock value need not equal the preferred-stock financing price: the securities can have different economic rights.
4. Acquirers in an M&A transaction
An acquirer may review historical reports, valuation dates, and grant approvals. Identified pricing or compliance issues can affect negotiations, but no particular price adjustment, escrow, or insurance exclusion follows automatically.
5. The SEC and underwriters in an IPO
IPO preparation can involve reviewing pre-IPO equity awards and the assumptions supporting their valuation. Required disclosures and SEC questions depend on the facts. A higher IPO price does not automatically establish that earlier grants were undervalued or require additional compensation expense. See the SEC Financial Reporting Manual.
6. The IRS
A report is not routinely attached to a tax return solely because it supports option pricing. The IRS can request relevant records in an examination or other authorized inquiry; its authority is not limited to an audit specifically labeled a Section 409A audit. See Section 7602.
7. Employees — indirectly
Employees know the exercise price stated in their grant documents. For a nondiscounted option, that strike price generally reflects the common-stock fair market value the company used or intended to use on the grant date; it does not establish the company’s current common-stock fair market value after a later valuation. A price above grant-date fair market value can still satisfy the price condition of the stock-right exemption. Knowing the strike price is different from having a legal right to inspect the underlying third-party valuation report. Section 409A does not itself generally require a company to furnish the appraisal report to an optionholder. Access to the report can arise through company policy, contractual rights, applicable inspection rights, or legal proceedings; employment alone does not settle the question.
8. Tax authorities in your state
A few states impose their own penalty on top of the federal one. California conforms to Section 409A under Cal. Rev. & Tax. Code § 17501 and adds a 5% state tax under § 17508.2 (reduced from 20% by AB 1173, effective for tax years beginning on or after January 1, 2013) — a combined 25% additional tax. Washington has no equivalent provision. Washington's 9.9% income tax under ESSB 6346 (effective January 1, 2028) does not change the federal 409A framework, though the underlying fair market value may still matter for state tax purposes.
What's actually public — and what isn't
| Item | Usual treatment and qualifications |
|---|---|
| 409A report | Generally internal; disclosure can arise through other obligations or proceedings. |
| Option terms, board records, and cap table | Generally company records; contractual and statutory access rights may apply. |
| Publicly filed S-1 or Form 10-K | Public; valuation and compensation disclosures depend on applicable requirements. |
| Court exhibits | Public if filed without applicable sealing or other protection. |
| Diligence or stockholder inspection | Access by the recipient is not automatically public disclosure. |
Distinguish disclosure to a counterparty from public filing. An M&A data room is generally private. A publicly filed prospectus or unsealed court exhibit can be public. A document produced under a confidentiality agreement or protective order is not automatically available to everyone.
Three practical implications
Document the valuation reasoning. Preserve the methodology, material assumptions, and information available as of the valuation date. Report price or turnaround time alone does not determine reliability.
Document the pricing decision and approvals. Identify the valuation date, relevant share class, supporting materials, and grant terms. Do not treat a separate board vote adopting a report as a universal statutory safe-harbor requirement.
Reassess before relying on an older value. Under Treasury Regulation §1.409A-1(b)(5)(iv)(B), a prior valuation is not reasonable if it omits later information materially affecting value or is more than 12 months old. Twelve months is not guaranteed validity. See the 409A valuation guide.
Frequently asked questions
Is a 409A valuation a public record? Generally, preparing a private-company valuation does not itself create a public record or routine filing obligation. A report or information from it can later become public through filings or proceedings.
Is a 409A valuation confidential? A private-company 409A report is not ordinarily a public record and is usually kept private as a company document. Contractual or corporate confidentiality protections may apply. Section 409A itself does not create a special statutory confidentiality privilege for the report, and privacy arrangements do not override applicable disclosure, inspection, or legal-process obligations.
Does the IRS see my 409A? There is no routine submission requirement merely because the report was prepared. The IRS can request relevant valuation records through its examination and other statutory authority.
Can employees see my company's 409A? Access to the underlying valuation report depends on company policy, contractual or statutory rights, and legal process; §409A does not itself generally require the company to furnish the appraisal to an optionholder. For a nondiscounted option, the strike price generally reflects the common-stock fair market value used or intended at the grant date; it does not establish current fair market value after a later valuation.
Will my 409A become public if I go public? An IPO can require public valuation and share-based compensation disclosures, but it does not automatically require publication of the complete report or every historical valuation.
Do I have to disclose my 409A to investors? Review the diligence request, existing information rights, offering disclosure obligations, and confidentiality terms. There is no universal answer based solely on the requester being an investor.
Is a 409A valuation legally required? An outside appraisal is not universally required. For the stock-right exemption, fair market value must be determined using a reasonable method, and other exemption conditions apply. The valuation safe harbors each have specific requirements and create a rebuttable presumption; they are not mandatory.
What happens if my 409A is found to be wrong? A valuation disagreement does not automatically establish a Section 409A violation. If a failure occurs, vested deferred amounts not previously included can become taxable, with an additional 20% federal tax and a premium-interest charge. Analyze the award, exemption or compliance, and any applicable correction relief.
A lawyer's bottom line
Keep the report, valuation inputs, and grant approvals together. Review access requests under the applicable rights and confidentiality arrangements, and reassess the valuation when later information materially affects it.
Before the next grant, confirm that the pricing support remains usable and that the award satisfies the relevant tax and corporate requirements.
This piece pairs with my broader guide to Qualified Small Business Stock and the rules around Section 83(b) Elections for founders considering early equity grants.
Granting equity to your team? Book a 20-minute call — we can discuss your valuation support and option-grant process.
