FMVs: The What, Where, and Why
Seen this acronym around, but not really sure what it means? FMV, or fair market value, is the accepted current value of one share of a private company's common stock. The FMV helps a company to determine their value, and ultimately enables them to offer equity to employees, founders, consultants, and other eligible parties.
In Financial Reporting, the FMV is used both independently and as an input in the Black-Scholes model to determine fair value. It is typically derived from a 409A valuation, which can be done by Carta or an outside evaluator. Given the importance of FMV, it can be found on most tabs within the SBC Expense Summary and the Min. Disclosures reports.
After receiving and accepting your 409A valuation, you may be wondering why your FMV is not reflected on your expense reports. As of right now, the FMV will need to be added by a company admin under Compliance > Financial Reporting > FMVs. Afterwards, a new report will need to be generated so as to include the most up-to-date values.
Still have questions on FMVs? Feel free to post below, and we will be happy to answer!
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Shevaun Cash
Financial Reporting Analyst
Carta
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