What determines my initial common stock price per share?
The initial price-per-share (PPS) for your common stock is equal to the par value, established in your company’s Certificate of Incorporation at $0.00001. As your company begins with 10,000,000 authorized shares, this sets the total value at a very low $100 (number of authorized shares * PPS) to represent effectively no company value.
Over time, your PPS can change to reflect the fair market value (FMV) of your company. The FMV is typically set by an independent valuation pursuant to section 409A of the Internal Revenue Code, which is very different from what you believe your company is worth, and also very different from the value an investor is willing to pay.
Later, when you need to establish a fair market value, Gust offers expert 409A valuations from the analysts at Gust Equity Management x Preferred Return.
Last updated on August 16, 2017