Companies that make an IPO and grant equity securities such as stock options to key employees at discounted prices during the 12 months prior to the IPO may invite scrutiny from the SEC. Grants of equity or stock options with exercise prices substantially below a reasonably foreseeable IPO price constitute what is commonly called “Cheap Stock.” Wharton provides valuations of share-based compensation that can be used for compliance with both SEC “Cheap Stock” guidelines and accounting guidelines under FAS 123R. A valuation in support of SEC compliance by Wharton’s experienced team of valuation experts can help ensure a smooth transition to the public markets.