The problem here is the valuation model for the common stock was broken. Properly factoring in liquidation preferences and your 409a valuation of <i>common</i> stock would not have ever hit $4.29 per share with 229 million shares outstanding. The fact that preferred shares sold for that price is completely irrelevant, it&#x27;s like saying the Tesla sells for $80k so we&#x27;ll just value this Nissan Leaf the same.<p>The IRS does not force these companies to improperly value the common stock. It&#x27;s just the default position they take because it&#x27;s cheaper for the company this way.<p>The 409a valuation is based on the price someone would pay for 100% of the outstanding shares of converted-to-common shares. This is much lower than preferred stock investment price (where the dollars are being put into the company to grow it, not being paid to shareholders to retire). It&#x27;s even much lower than the secondary market price since that&#x27;s the price for a small percentage of shares -- try selling them all and the bid&#x2F;ask would fall to zero.<p>The price of illiquid common stock must reflect the risk-taking stance of management and the Board. Even having an $800m offer doesn&#x27;t have to boost the common stock valuation so much because if management is declining those offers and swinging for the fences you can reasonably factor in that risk in the price.<p>Unless and until an actual IPO, companies should take a discounted future cash flow model based on single-digit future growth to demonstrate the common stock value is absolutely worthless, and everyone should be required to file 83(b).<p>We know its a lottery ticket, the tax code allows us to value it appropriately. The real problem is companies straight out fucking up their 409a. Common stock shareholders at Good would not be crazy to consider a lawsuit.