A 409A valuation, derived from Section 409A of the U.S. Internal Revenue Code, establishes the fair market value (FMV) of a private company’s common stock. It's a mandatory step for companies issuing equity compensation (like stock options or RSUs) to ensure IRS compliance and avoid steep penalties. https://valadvisor.com/understanding-409a-valuations-and-their-importance-in-equity-compensation-plans/