What is the “start up” valuation method?
To qualify as “illiquid stock” of a “start-up” company under the regulations, the following requirements must be met: • the valuation must be made reasonably and in good faith and be evidenced by a written report that takes into account the relevant valuation factors described above; • the company (and its predecessors) cannot have been in the active conduct of a business for ten years or more; • the company cannot be public (i.e., it cannot have any securities that are readily traded on an established securities market); • there must not be any permanent put or call on the stock or any permanent requirement that the company or any other person purchase the stock (a right of first refusal or a repurchase right for unvested restricted stock awards is permitted); and • at the time of the valuation, it cannot reasonably be anticipated that the company will undergo a change in control or an initial public offering within 12 months after the valuation. The person(s) performing the valuation
