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Performing a Simple Cap Table in Excel
If you have an SBA business you probably have heard of the simplified cap table. You may not be entirely sure what it means. In this article we are going to answer the question "what is the simplified cap table?" and provide some examples of when it might be useful to use a simplified version of this table. After reading this article you should be familiar with the simplified version of the cap table.

Many investors are unfamiliar with the term "simplified." You may hear about this term but not know what it means. Basically a waterfall analysis is the fancy technical term used to explain the method of calculating the dividend and other payments each shareholder and secured debt holder will receive upon any sale event of the business (e.g. an acquisition, an IPO, or similar transaction). Essentially it is just a series of mathematical calculations where you apply all the deal terms simultaneously to the entire cap table so as to flow through to the end and receive the proceeds.

One example would be to calculate the cash flows associated with the exercise of stock options or warrant exercises. We would need to add both the exercise price per option and the strike price per warrant to get our final number. This would then be added to all of the other liquidity and equity components of the business and come out as our simple cap table for the initial public offering of the business. While this exercise and purchase price would be included in the IPO costing in the cap table, the underlying liquidity, equity and warrants would not be considered part of the cost of trading and therefore would not be taxed as such.

Of course, the purpose of these sheets is to help potential investors and venture capitalists in determining if a company is actually worth investing in. These are also used by individual retail investors interested in purchasing shares of stock in a small cap company that has not yet been publicly listed on a stock exchange. The spreadsheets are essentially a workbook for investors to use when determining if a company's trading opportunities are worth pursuing. You can find these simple cap table software spreadsheet online for free. The only cost is that of purchasing the template. It literally costs nothing.

The spreadsheet would basically require that you fill in your data for the Company, its current market cap, its current per share earnings and capitalization, and a few other basic financial numbers. You would then submit your information and proceed to copy paste into the appropriate fields into the appropriate cells. Of course, there is a lot more than just the standard securities valuation data required here. It's also important to have complete and accurate information here such as the warrant and stock holder information. startup is what makes a simple cap table template so helpful.

What you can expect from these types of spreadsheets is that they are pretty basic and only require the standard securities valuation data. However, there is more than just this included as well. For example, you may also be able to find warrant information as well as late stock price movements and other such information that will prove helpful as you evaluate any sort of potential investment. Basically, these types of cap sheet templates have everything you need to perform your own form of early stage company analysis.

Now, what many people forget is that these same types of spreadsheets can be used in order to perform a waterfall analysis as well. Basically, this type of analysis is simply an advanced version of fundamental analysis where companies are being ranked according to their overall asset value. Of course, you'll want to keep things simple and only include the most reliable information here such as the current and year-end cap table results. However, as you move into the more complex stages of evaluating a company for an early stage buyout or other acquisition strategy, you'll find that performing a waterfall analysis becomes necessary as well.

Essentially, what you can expect from these types of spreadsheets is that they will only show you the company's most recent financial statements as well as information on their equity and preferred stock ownership. However, the point of performing waterfall analysis here is to get a complete picture of the companies' potential in order to make the right decision regarding a purchase or acquisition. Essentially, this means that you're going to want to focus on cash and market cap, as well as debt and earnings before considering all other factors. Of course, with all of this said, don't think that you can easily jump from one type of ranking to another once you've already chosen one particular company to research. Just make sure you do not use this as a excuse to skip looking into the other companies' capital structure and liquidity.
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