If you are the head of a corporation’s financial department, then you almost certainly have a cap table in operation that shows the capital structure of that particular company. However, the reasons that it is important you do this are multitude. It is not just something you do or a form of busywork in the course of your job. Here are the specific reasons why cap table tracking is so crucial, especially if you have investors.
New Investors
Your company may have investors currently, but you always need new investors. Those new investors will definitely want to know who controls the capital within the company and they will also run various scenarios to see what certain business decisions will lead to. This is all much easier to do with the use of a cap table.
Equity Analysis
In some corporations, there may be certain employees who hold an equity stake or who have stock options. The value of these can change at any time so it benefits the employee to be able to check whenever they want when they need to know what the real-time value of these benefits happens to be.
Audit Protection
In the event that a company faces an audit from the Internal Revenue Service or any other financial authorities, the process of cap table tracking will greatly aid the legal team in presenting a cohesive and easy-to-present defense.
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