Black-Scholes ESOP Valuation Calculator
Estimate the fair value of employee stock options using the Black-Scholes model.
Designed for Indian startups and private companies, this calculator provides an indicative fair value for ESOPs based on commonly used valuation assumptions. It can help founders, finance teams and auditors understand the accounting value of stock options under Ind AS 102.
Assumptions
- Options are non-dividend bearing and are assumed to be exercised only at time of exit.
- Taxation is not taken into account.
- Leaver provisions are not taken into account.
Inputs
The theoretical share price on a per share basis, the prevalent market value of the shares at the time of valuation.
The cost of exercising one option into one share, on a per share basis.
The estimated time until a liquidity event, such as an exit or sale.
The total number of options in the option-holding being valued.
We have selected 7% as a placeholder. This changes frequently and depends on time to exit. Indian Government Securities (G-Secs) yields are often used as a benchmark for this input.
We have selected 35% as a placeholder. For private companies, volatility is usually benchmarked against listed companies operating in a similar sector. Volatility is typically higher for younger companies and high-growth sectors.
Result
How this is calculated
The Black-Scholes formula prices a call option as S×N(d1) − K×e-rT×N(d2), where S is the share price, K the exercise price, r the risk free rate, T the years to exit and N the cumulative normal distribution. d1 and d2 are derived from the volatility, time to exit and the ratio of share price to exercise price. The value per option is multiplied by the number of options held to give the total.
Disclaimer and limitation of scope. This valuation estimate is derived from the Black-Scholes model and the assumptions entered above. The figures are indicative only, generated from user-provided data and self-assessments. Vestd has not audited, verified or otherwise checked the inputs used to arrive at these results.
This tool is intended for strategic discussion and internal planning only. The output is not a professional opinion of value and does not constitute a formal valuation report under Ind AS 102, the Companies Act or the Income Tax Act (Rule 11UA). Engage a SEBI Registered Valuer or a Merchant Banker for a formal, certified valuation for statutory filing, financial reporting or regulatory compliance.
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