Fair Market Value
The current, legally defensible value of one share of your company's stock — the number that determines what employees pay to exercise their options.
Quick Answer
Where does a company's fair market value per share actually come from?
It comes from a formal 409A valuation, an independent appraisal that produces a specific dollar-per-share figure — you don't have a defensible fair market value without that underlying valuation process behind it.
- FMV is the output; the 409A is the process that produces it
- An expired 409A means the FMV attached to it expires too
- Always confirm the valuation date behind any FMV figure you're given
The Lovie Advantage
Lovie surfaces your current fair market value next to the valuation date it came from, so you always know whether it's still valid.
See how this connects to Fully Diluted Shares. For the formal definition, see the IRS's small business and self-employed tax center.
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