While Shareworks Expense Accounting makes it dead easy for private companies to complete the option valuation process, we provide this Black-Scholes calculator to demonstrate a method that non-public companies find useful if their plan administration needs are minimal. This calculator can be used to determine “fair value” under ASC 718. When things get complicated, contact Solium’s resident numbers guy, Michael Esposito.
P.S. One input that may be tough to judge is the the first one — the fair market value of the underlying shares as of the grant date. If you find yourself needing a 409A valuation, be sure to check out Solium Analytics.
Instructions for Using the Black-Scholes Calculator
The Black-Scholes calculator is found below. Enter the values in the cells according to the instructions below.
- Fair market value: Enter the fair market value of the option on the date of grant.
- Exercise price: Enter the exercise price of the option.
- Expected term: Enter the expected term of the option grant as calculated by SAB 110.
- Interest rate: Enter the interest rate.
- Dividend rate: Assuming the company does not have any dividends, leave this cell at 0.
- Volatility: Enter the volatility based on an appropriate number of public peer companies.
- The values in the next two cells are part of the calculation, so do not change these values.
- Fair value: After inputting the values you entered into the above cells, the fair value per share of the option displays.
How it works in Shareworks Expense Accounting
Is your company ready to move beyond spreadsheets? Take a look at how easy it is to value your options using our platform.
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Input your own assumptions.
Or let Shareworks calculate them using your plan data.
You can even calculate peer volatility right in the platform.
This Black-Scholes calculator is being provided to you on an “as is” basis without any express or implied warranties, including the implied warranty of merchantability or fitness for a particular purpose. It is the user’s responsibility to determine whether the calculations that are included are appropriate for your purposes or not. This is only one example of a calculation that may be done in many different ways. It is being provided for informational or educational purposes only. This file may not be shared with any third party and may only be used by the person who received it from Solium Capital Inc. In no event shall Solium Capital Inc. be liable for any monetary damages, including any incidental, special, or consequential damages. By using this spreadsheet, you are agreeing to be bound by the legal limitations set forth above. If you do not agree, stop using this spreadsheet and delete it from your system.