Stock options · BSPCE · BSA · AGA

Expert stock option strike price valuation services

Setting a strike price at fair market value for stock options, including French BSPCE, BSA and AGA, takes objective financial methods: an option pricing model, to estimate the ordinary share value given the rights of the preferred shares, and a discount for lack of marketability.

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I.The method

Fair market value in 3 steps

Step 1

Reference valuation

The starting point is the company’s valuation, either set by a recent funding round or, if there hasn’t been one, calculated from scratch.

From this first valuation, we measure the value of each class of shares.

Step 2

Ordinary share value

When the shareholders’ agreement includes liquidation preferences, which give preferred investors priority in an exit, we calculate the value gap between preferred and ordinary shares, following the waterfall set out in the agreement. We measure that gap using option pricing and the Black-Scholes formula.

Step 3

Discount for lack of marketability

The discount for lack of marketability adjusts the value of an illiquid security held by a minority shareholder whose shares carry specific restrictions (lock-up, transfer-approval clauses, call options, etc.).

This discount is applied to the ordinary share value and is calculated with the protective put approach.

II.The process

A simple, iterative process

Information gathering

You send us the information we need to complete the financial assessment.

Call with an analyst

Our analyst walks through the information with you and discusses which methods to consider.

Adjustments

On a second call, we refine the assumptions and the results with you.

Valuation report

We send you a valuation report that sets out the results and assumptions.

III.Our platform

One method behind both our services

Business valuation or stock option strike price: every engagement runs on Sovalue Intelligence, our valuation platform. A proprietary database, institutional models and dedicated analysts.

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