ARAI CPA / Founders preparing for an IPO

For Founders

Exchange review asks less whether the numbers are right than whether you can explain them.

Stock option exercise prices, capital policy, moving founder shares into a holding company, the tax audit history. In IPO preparation, each decision is one you will be asked to justify years later. A Japanese CPA and tax accountant who worked on IPO support and listed company audits at EY ShinNihon looks at your preparation the way the audit firm and lead underwriter will, from the founder's side of the table. Work is done in English or Japanese.

Book a free first consultation See typical situations

Situations

Situations we see

These are the situations founders most often bring to us. In each, the question is how today's decision will look in review.

What exercise price should our stock options carry?

Each VC round pushes the share price up and makes employee options harder to price. The floor that keeps options tax-qualified in Japan (the safe-harbor value) and the accounting fair value are different things, and the gap between them becomes share-based compensation expense the audit firm will ask about.

The issueEstablish the tax floor, then agree the relationship to the accounting value with the audit firm before granting. The board resolution date, contract date and valuation date must line up; review checks them.

Should founder shares move into a holding company, and when?

A holding company for estate planning or as the vehicle to buy back employee shares. Once VC money is in, transfer restrictions in the investment agreement apply, and the higher the share price, the larger the capital gain on the transfer.

The issueIf at all, before the VC round while the price is low. Founders are valued as controlling family shareholders, so the lower minority valuation is not available. An artificially low valuation invites penalty tax, which is close to fatal in exchange review.

Capital policy seen from the IPO and from the estate at the same time

Ownership ratios, option design, transfers to family. Dilution at listing and the estate or gift tax afterwards are the same shares seen through different lenses. Designed separately, they leave issues that cannot be moved after listing.

The issueFor each market cap scenario, one table showing the founder's stake, the expected estate tax and the transfer routes (gift, settlement-at-inheritance election, trust).

We paused the IPO. We still want to measure business value and use it.

The monthly close, divisional P&L and fixed asset ledgers built for the IPO remain assets if the listing stops. They can underpin the mid-term plan with numbers and make the value and invested capital of each business visible.

The issueResidual income and return on invested capital by business, with sensitivity analysis, to show how much enterprise value the plan would add. If the IPO resumes, the same work supports the business plan reviewers will ask for.

The tax floor and the accounting fair value answer different questions. A valuation report that looks at only one of them stops at the audit firm's first question.How we approach stock option valuation

What we do

We do not run the whole IPO process. We focus on the decisions a founder has to make personally, and we design them around the roles of the audit firm, the underwriter and counsel.

Stock option and share valuation

Tax-qualified floor valuation, accounting fair value (Black-Scholes, Monte Carlo), explanatory material for the audit firm, updates for each round.

Capital policy and founder shares

Stake and tax by market cap scenario, timing and price of a holding company transfer, consistency with investment agreements.

Internal control (J-SOX) and the finance function

A close and control environment that stands up in review; organizing and tracking the issues raised in the audit firm's short review.

Accounting and tax retainer for pre-IPO companies

Monthly close quality, pre-emptive tax audit risk review, judgments on group restructuring, options and executive pay.

Business valuation and the mid-term plan

Residual income and invested capital by business, sensitivity analysis, translating the plan into numeric drivers. For management after a paused IPO, or as evidence when it resumes.

What we will not do

Backdated minutes and artificially low valuations. The downside when they surface in review is out of all proportion to the gain. We find the legitimate route to substantially the same result.

FAQ

Common questions

We already have an audit firm and a lead underwriter. Is there still a role for you?

Yes. Independence rules keep the audit firm from advising on management decisions, and the underwriter looks at you through review. We sit on the founder's side and shape decisions into a form both can accept.

Can you do just the stock option valuation?

Yes. We prepare the report and handle the explanation to the audit firm, and can keep it updated round by round.

Can a foreign founder or a company with overseas investors work with you?

Yes. Meetings, correspondence and documents can be in English, and we are used to coordinating with U.S. advisors.

How are fees set?

Valuation reports are a fixed fee per engagement; retainers are monthly. We confirm scope in the first consultation and quote in writing.

Zeimu Koho, October 2026The Residual Income Model in Share Valuation: Practical Implications of the Expert Panel's Findings

Contact

The first hour
is free.

We organize your situation, identify the issues, and tell you plainly whether we can help. We reply within two business days.

Emailinfo@araicpas.com
Tokyo5-5-17-303 Kugayama, Suginami-ku, Tokyo 168-0082, Japan
KoriyamaCorpo Bldg. 301, 1-5-1 Tsurumidan, Koriyama, Fukushima 963-8861, Japan
MeetingsIn person / Online (Zoom, Teams), scheduled around U.S. time zones

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