Investors are happy with a 10% discount from preferred when buying common shares with no liquidation preferences?

Not every company has onerous terms.

But you could still factor that in to whatever the fair market value is.

Call it a 50% discount if you like, to get to the "market value". But that still sounds like a much much better deal than what the CEO is offering

Even a 1X liquidation preference knocks a lot off, and that's hardly onerous.

There's a reason why the 409a value is often only 10%.

Right, so why does it matter when it occurs?

An investment round is a way for the company to aim for a higher future level than they would otherwise achieve. That's the moment when the shares are presumably the cheapest, and there is already a deal in progress so it is very easy and convenient to roll in another transaction. Since the lawyers are getting paid anyway and money is flowing at an established valuation it is an excellent moment to offer your shares.

Later on you might have to re-establish a valuation and you will have to make a lot of overhead on a relatively small transaction.