A capitalization table, or plainly ‘cap table,’ is a document that shows the capital structure as well as ownership of a company. A typical cap table is typically a spreadsheet of a list of founders, including executives, investors, and employees, with equity in the company.
Proper cap table management is essential to ensure that the company attracts investors and receives funding without diluting the owner’s stakes.
Keeping a proper cap table is tedious and very demanding, but it is essential in many ways. For starters, current equity owners expect to keep track of who is in control of the company and to forecast any potential buyouts and payouts easily.
They can also use the cap table to evaluate their level of control, especially during negotiations, and to study the historical insights of equity stakes.
Available Cap Table Options
There are two ways a private or public company can manage its cap table: self-managed and outsourced. New startups and small to medium-sized establishments can conveniently manage their cap tables using specialized software such as Cap Share or even a spreadsheet.
However, as the company grows and more investors join in sharing the company equity, it becomes necessary to keep track of other elements of the cap table such as equity management, stock issuance, and record integration. Growing companies more often choose to outsource their cap table management to a legal company to ensure that company ownership data is both correct and secure.
Moreover, a professional cap table management company would be very good at ensuring that a client company’s cap table complies with all legal requirements and is consistent with all the legal agreements entered by the founders, investors, and employees.
Would you like to learn more about how professional cap management will help your company?
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