One service that our firm provides is annual impairment testing for accounting compliance purposes — goodwill testing resulting from a significant US GAAP change in 2001. Similar evolution of independent valuation requirements and recurring services as we see with 409a. I can recall the same dread and fear from all of those public companies carrying material goodwill balances (thousands in 2001): “it is a nightmare”, “the costs will be exorbitant”, “who will complete all of the work”…and on and on. Four.5 years – and the creation of only a “minor” cottage industry later – we find most CFOs dealt (and deal) with SFAS-142 without much lingering complaint – of course the trade-off to our fee is the amortization savings (assuming no impairment). There doesn’t appear to be a similar trade off here with 409a??? (taxes and penalties saved is certainly a tag line from the BD guy pitching his firm�s appraisal assistance…yes?).

But, I can self-servingly suggest that independence in valuation (vs. the very dependent Board…err, we are being forthright here aren�t we!) will ultimately best serve the investor, perhaps not without legitimate bitching and moaning.

And, I don’t personally know of any fellow appraisers who are rolling in 409a dough � none of us is laughing to the bank: most are weary from the complaining, ever-declining fees and the fly-by-night appraiser quacks posing as experts. We turn down/refer more of this work than we accept.

Accept it gracefully, pay for it to be done correctly and get on with growing the start-up!

MSK