Simple Agreement for Future Equity (SAFEs), convertible notes, and embedded derivatives are among financial instruments which feature optionality, which can obscure confidence in the expected value of the associated future economic benefits. Published guidance is limited, and adding to the complexity, some alternative investment transactions have optionality features lurking within, dormant, and not readily apparent. This presents a wrinkle for practitioners who try to value assets which could morph into something else tomorrow. Listen to how specialists in this area approach these issues, and read below for key AICPA resources to improve your own valuation analyses.
Key Takeaways
- Applications and limitations of formal valuation guidance
- How optionality characteristics influence financial instrument design
- Best practices for valuing instruments with optionality features
- Approaches for early stage assets lacking underlying valuations
Guests: Oksana Westerbeke, Partner, and Jared Hannon, Director, Grant Thornton
Host: Howard Mah-Lee, Senior Manager, AICPA Valuation Services
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RESOURCES FOR FURTHER EXPLORATION
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Accounting and Valuation guides from AICPA If you are an AICPA-FVS Section member see below for free access to these guides
- Valuation of Privately Held Companies Equity Securities Issued as Compensation
- Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies
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