Employee Stock Option Valuation Services

Expert valuation of Employee Stock Options (ESOP) using the Black Scholes Model, Binomial Option Pricing Model & Monte Carlo Simulation

Groves & Partners offer expert employee stock option valuation services to help companies accurately determine the value of their employee stock options. We understand that an employee stock option valuation requires specialised knowledge and expertise due to its unique characteristics. This includes factors such as vesting schedules, expiration dates, and exercise prices. Our team of valuation experts, consisting of Chartered Accountants and Registered Business Valuers, possess the necessary skills and experience to provide accurate and reliable employee stock option valuation services.

Our ESOP valuation services provide businesses with the following benefits:

  • Accurate and reliable valuations: Our team uses industry standard valuation methodologies and techniques to ensure accurate and reliable valuations.
  • Informed decision making: Our valuations provide businesses with a clear understanding of the true value of their employee stock options, enabling them to make informed decisions.
  • Prerequisite company valuation: The valuation of employee stock options requires a pre-requisition valuation of the underlying company shares. We can value the shares of companies as we are also experts in this area.

Groves & Partners are committed to providing our clients with exceptional service, and delivering accurate and reliable employee stock option valuations.

Make An Enquiry

Our Process

The value of employee stock options is dependent upon the specific structure of the employee stock option plan and the company itself. Our approach to valuing employee stock options is tailored in consideration of the situation of our clients.

Our typical process is outlined below:

1. Initial no-cost review

We commence by reviewing information regarding the employee stock option plan and company to the extent that this is available. In doing so, we will often review documents, such as employee stock option grant letters and financial statements. This review allows us to make an early determination of the nature of investigations we will need to undertake, as well as to understand the technical approaches required in valuing the employee stock options.

2. Confirm scope of engagement

Following the conduct of our initial review, we will advise you of our professional fees to undertake the valuation, and the scope of our engagement.

3. Data and information request

To enable an accurate valuation of your employee stock options, we prepare a thorough information and data request schedule. This data request is typically tailored to lessen the stress and the pressure involved when our clients gather their data.

4. Initial data and information review

We review the data and information provided in response to our information and data request schedule. We then conduct technical analysis, and consider any additional data or information required for the completion of our valuation services.

5. ESOP valuation report preparation

We will provide you with a report which outlines the value of employee stock options. We also provide a comprehensive explanation to outline our reasoning for selecting ESOP valuation methods, and our calculation of value derived from the specific valuation strategy.

6. Meetings with you and your advisors

We typically conduct regular meetings with you and your other professional advisors, such as your accountants and lawyers. This is to provide time-sensitive advice regarding the nature of the ESOP valuation and our work. We are committed to maintaining ongoing communication and engagement with our clients.

Make An Enquiry


Why do I need an employee stock option valuation?

Common reasons which require the valuation of employee stock options are financial reporting and taxation purposes. The exercise of employee stock options may result in taxable income for the employee, and therefore an accurate valuation of the options is necessary to determine the correct tax treatment. Employee stock options are also considered an expense to the company, and must be accounted for in the company’s financial statements. The value of employee stock options must be estimated, and recorded in the company’s financial statements in compliance with accounting standards.

How are employee stock options valued?

There are industry accepted valuation methods which are used to value employee stock options, such as the Black Scholes Model, Binomial Option Pricing Model, and Monte Carlo Simulation. The use of these methods requires the valuation of the company’s underlying shares, and calculation of volatility for the company’s shares.

Which factors affect the value of employee stock options?

The current share price of the company has a large impact on the value of employee stock options. The volatility of the company’s share price, the vesting period of the employee stock options, and the proposed exercise price of the employee stock options are also a driver of value of employee stock options.

What are the tax implications of an employee stock option valuation for the company and the employees?

Employee stock options are subject to taxation at various stages for both the company and the employees. The tax implications of an employee stock option valuation depend on several factors, including the type of options, the price at which they were granted, and the timing of their exercise. For companies, employee stock options are generally considered a deductible expense for tax purposes. However, there are certain rules around when the deduction can be claimed, such as when the options are exercised by employees. Furthermore, companies may be required to pay additional taxes, such as fringe benefits tax, on the value of the options granted to employees. Groves & Partners are not experts in taxation, hence you should seek advice from an experienced and expert tax practitioner regarding the tax implications of employee stock options.

Latest Employee Stock Option Valuations Insights

Valuation of Employee Stock Options Using The Black-Scholes Model

11 May 2023

Employee stock options are a common form of compensation in many companies. Employee stock options allow employees to ...

read more

An Overview of Employee Stock Option Valuations

16 March 2023

Employee stock options are a common form of equity compensation provided by employers to their employees. These options ...

read more

Valuation Considerations in Employee Share Schemes (ESS) & Employee Share Option Plans (ESOP)

29 March 2022

Employee Share Schemes (“ESS”) and Employee Share Option Plans (“ESOP”) are used to incentivise employees by issuing ...

read more