Notes

Using Cap Table Modelling For Accurate Real Time Market Buyings Data
The Cap Table Modeling is also known as Multiple Listing Service (MLS) or a "One Plan Sales Technique." For those unfamiliar with the term, the Cap Table is a financial accounting concept wherein companies simultaneously record sales in multiple currencies. Multiple recording of sales in different currencies is known to have an adverse effect on the comparables of a company. In short, a company must record all of its revenue in a single currency to properly track and record its international revenue.

The use of Cap Table Modeling is prevalent during multi-country mergers and acquisitions where companies are forced to record their revenue in multiple currencies. For instance, when a corporation decides to acquire a foreign business that is based in the United Kingdom, one would need to convert the purchase price into United Kingdom pounds and then into United States dollars. A similar situation arises when purchasing an equal number of digital shares of a foreign company within the United Kingdom. Therefore, when merging or acquiring a foreign company, companies must record all of the stock holders in their respective country of residence using a cap table. This is because, by virtue of the laws of multiple countries, each stock holder is legally entitled to receive dividends or capital gains in the country in which he or she may be registered.

In order to properly record this ownership information, companies resort to the use of cap table modelling. Basically, it is a mathematical model created utilizing the various financial ratios within any given piece of equity or company ownership information. If this model can successfully approximate these proportions, then the resulting value for that particular piece of information will be a single, accurate answer. The use of this sophisticated modelling procedure is necessary due to the large volume of data that must be recorded within any given company, regardless of its location. In other words, if all company information was recorded by way of the cap table model for the benefit of a single shareholder, then it would take billions of years for the company's owner(s) to realise a percentage of his or her investment.

Another reason why companies must use the use of cap table modelling is due to the existence of multiple languages on the world stage today. For example, the majority of businesses in Canada are operated in French. In startup to this, most banking systems are operated in English. In most instances, even when a business operates in another country, many of its customers and/or employees may only speak or understand English. To address this issue, most banking organisations now require potential investors, directors, and employees to sign dual language documents.

The primary objective of cap table modelling is to ensure that the interests of all parties are accurately represented within the documentation. In other words, when one type of information is recorded on one sheet of paper, then it must also be recorded on another sheet of paper. Therefore, companies have to be prepared for the possibility that their legal agreements, royalty payments, share certificates, and other important paperwork will not be represented on one single sheet of paper. Furthermore, if an investor signs an agreement in a language other than English, then that document will also need to be prepared in a different language. The ultimate aim of cap table modelling is to prevent language barriers.

If an investor were to invest in a company based in Canada that does not provide Cap Table Modeling services, then he or she would be required to access an accounting system that does not allow for the recording of investment related data. As a result, the investor would not be able to determine the value of his or her particular equity and / or ownership interest. This could have severe financial consequences for the investor. For instance, if the value of the equity were to decline, the investor would have no way of ensuring that he receives his or her initial capital allocation - the cash dividend. Likewise, if the value of the ownership interest were to appreciate, then the investor would also not receive the cash bonus at the time of performance awards.

In the case of a company based in Canada, Cap Table modelling can make very good use of the existing regulatory frameworks to ensure that the information provided is accurate. It is very important that all Canadian investors are able to track their investments on a continual basis. Moreover, it is also of crucial importance that the information provided by this method is error free. This is because the value of their interests and / or ownership may be low at the time of reporting but may quickly grow as a result of positive / negative news and events that may affect the market.

A company that is registered with the Canadian Securities Corporation (TSCC) is required to file its annual report. This is where a company can make sure that its accounts are being monitored on a continuous basis. The TSC requires that companies provide reports such as their profit and loss statement, balance sheet, income statement, cash flow analysis, industry overview and sector analysis. The use of Cap Table Modeling in these reports allows for the quick creation of real-time reports which are then converted into text format for easy review and analysis.
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