Unable to get out due to coronavirus? Social distancing means putting our normal day-to-day routine on hold for now, so why not take this time to learn how to make the most out of your shareholder management software?
Apart from this, several platforms provide services that provide the best accounting and take care of the complex calculations for you like computing the fair value of share-based compensation on the basis of volatility, discount rates, and equity value, among others.
Importance of Cap Table Management
A properly organized cap table results in the ability to conduct better negotiations when it comes to raising funds for your company. It also yields smoother operations, since vested shares are carefully monitored.
Read on, so your business can finally reap the rewards that come from mastering your equity management software.
Easy cap table management
Accounting is a tough and thankless job. Plenty of companies ranging from startups to later stage and pre or post-initial public offerings rely on Excel to monitor and record their stock option activity. While Excel remains a powerful and affordable solution, businesses can do better and dodge the downsides in using it for managing their shares.
According to a report by Advance Market Analytics, increased efficiency partnered with the growing awareness of cap table management applications primarily drives the expansion of the equity management system market.
Some techniques you can incorporate with your shareholder management software include optimizing workflows involving the latest endowments and approvals, organizing and monitoring stocks, options, authorizations and convertible notes, importing shareholder issues as well as setting notifications for continuing maintenance. Best of all, all your information is safely secured on trusted servers.
So let your equity management software handle it all—financing rounds, creating various investment scenarios as well as eliminating cumbersome spreadsheet computations.
Clear stock option pool waters
During the early stages of an enterprise, generally prior to hiring the first employees, a number of company shares will be reserved for an employee option pool. Part of a share structure called an equity incentive plan, sensible enterprises need to properly manage their option pool, since there is a risk of overgranting equity. Likewise, companies must attempt not to reserve more than they plan to utilize.
It’s safe to say that both employees and founders must understand how to clear the muddy waters in their stock option pool. If you’re equipped with an equity management system, you can use waterfall analysis and powerful reporting tools to figure out how to make a profitable exit.
Cap table management software users can run comprehensive scenarios to appraise term sheets and future funding rounds. They can also calculate valuations and waterfalls at the click of a button. The good news is the best platforms in the market offer the most robust waterfall analysis that provides reliable visualization of all aspects of your business’ share management.
Apart from this, businesses can run dozens of auditor-ready reports in under a minute with their equity management system. This saves and frees time for bookkeepers to focus on tasks that propel business growth.
Obtain the best 409A valuation
We understand that the last thing that any startup or company wants to fuss about is sorting out their taxes and constantly worrying about the legal side of the business. It’s easy to let tax considerations slip your mind when there are other important things that concern you, but every enterprise needs to think about tax law early on to avoid hassle and confusion later.
As with all things involved in bureaucracies, tax matters are complex and can greatly impact your company when mishandled. This is where your shareholder management software comes in and saves the day.
Using an equity management software trims the time you spend acquiring your 409A valuation and reports. Besides this, it reduces costs that you might have spent hiring a professional valuator. This is a great takeaway, especially if you’re just starting out.
If you can afford to hire a valuator, you can sync your cap table with theirs, so that you can obtain the correct information at the end of the day. You can also perform your own valuation alongside them for added verification.
Some cap table management software are also working with respectable valuation firms and guarantee that your valuation is fused with and safely stored in the platform, whether they are produced by partner firms or by your selected accounting firm.
Get started today
With an equity management system, you can always work off the most recent cap table and conveniently run what-if scenarios to gain a better vantage point on where your shares stand. Now that you know more about the advantages a cap table can bring, it’s time to select the best one for your company.
Eqvista is a sophisticated equity management software that allows busy founders to track and organize their company equity effectively. With our cap table, you can greatly reduce the time spent on managing spreadsheets and work to grow your enterprise. All the best features of the newest cap tables are available for you on Eqvista at the click of a button.
Sign up on our app today!