Case Study #16 – Valuation of Common Stock Due to a Tax Triggered Event

Company X (company details removed for privacy purposes)

InteleK was engaged by a stockholder of a tech start-up company to determine the value of their non-preferred shares on a non-controlling and non-marketable basis for a tax triggered event by a change in country of residence.

Valuation Process:

Valuation Result:

Our client’s main concern was the tax implications that would result from a valuation based on the post-money value of the company from its latest financing round. Our analysis concluded that for our client’s purposes, the post-money value was not indicative of fair market value and instead an investment value. Our conclusion of value then implied a material reduction in tax liabilities based on fair market value compared to a much higher valuation based on investment value