FVC2325. Hybrid Method and common 409A valuation pitfalls

During this session, we will quantitatively demonstrate typical issues with the “traditional” OPM. Specifically, we will analyze situations where application of the “traditional” OPM results in non-meaningful yields for preferred stock and overestimation of the liquidation preferences for the senior preferred stock. We will also discuss the application of the Hybrid Method to address the issues with the “traditional” OPM or situations where the outcome is bimodal.

Learning Objectives:

• Determine the use of the “traditional” OPM with senior financing round
• Recognize the issues with the “traditional” OPM
• Recognize the situations where the Hybrid Method is appropriate
• Apply the Hybrid Method in a scenario where the outcome is bimodal