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Continuing on Why is there a significant disparity between 409A valuation and fair market value?

Is there a formula for deriving preferred price from FMV? Does it change based on how many rounds the company has raised or some other metric, such as number of employees?

https://scalar.io/insights/fair-value-of-common-stock-as-a-percent-of-preferred gives some guidance but doesn't fully answer my question.

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Valuation of a preferred share could be about as complicated as determining FMV in the first place.

Primarily, this is because 'preferred shares' can mean many different attributes, such as the ability to convert to common shares at some ratio, dividend considerations, voting considerations, etc.

There is no way to derive the value of a preferred share purely by looking at the overall valuation of a company.

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  • I suspected as much based on the lack of information. Thank you!
    – devth
    Commented Apr 22, 2021 at 19:06

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