William D. Cohan, writing in the New York Times’ DealBook, characterizes the third-party valuations of private companies under Section 409A of the Internal Revenue Code as Silicon Valley’s “dirty little secret” and a “shell game.” Especially in the aftermath of the financial crisis, there has been plenty of populist rhetoric about practices in the business world, and much of that criticism has had basis in fact, but this take on 409A valuations seems awfully strained.
As described in Cohan’s article, Section 409A and the related rules require that companies obtain independent valuations in connection with their issuance of equity-based awards to employees, and failure to comply results in tax penalties. Cohan details the fact that various service providers charge significant fees to undertake these valuations, using words like “supposed” experts to make the whole enterprise seem like a racket, but the reality is that the rules do exist, and these valuations have to be done. If it was possible for just anyone to make up a valuation for a bargain-basement fee, heck, I would consider doing it as a side gig from my legal work. But the rules actually go into detail as to the required qualifications for firms providing these services. Cohan notes in the article that the SEC would not comment on these practices, but this is really more of an issue of tax law than securities law. What constrains companies and their hired valuation help from simply making up numbers out of thin air is the fact that their decisions are subject to later IRS scrutiny and sanctions.
The Financial Samurai personal finance blog posted 
My law firm recently joined 
When I am speaking to potential new clients, my pitch is pretty simple: I’m the same guy that would have handled your matter when I was with a big firm, but without the big firm infrastructure, I’m able to offer those same services at more reasonable rates and with more personal service. Fortunately, I’ve found that appeal works more often than not, and I’ve built a nice practice. Sometimes, however, potential clients will elect to go with a larger firm. Certainly, there are matters that are better handled by teams at large firms (multi-billion dollar merger, IPO underwritten by first-tier investment bank), but there are certain transactions that I’m capable of handling, where the potential client makes what seems to be the safer choice of a larger firm. (I don’t want to come off as too harsh about big firms, where there are many fine lawyers – and they’re a significant source of referrals for me!)
This 
Matt Levine writes in Bloomberg View about 