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Cap Table Reconciliation

Cap table reconciliation that rebuilds the cap table from the consents, grants and SAFEs alone, then ties it line by line to the company’s export before investor counsel looks.

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The problem

The missing board consent turns up in investor counsel’s diligence memo

Before a priced round closes, an associate has to show that each share, option, warrant and SAFE on the company’s cap table was validly issued. That is a signed agreement, a board approval, room in the plan and the charter, and an entry in the stock ledger. It is checked by hand across thousands of data-room pages, usually on a fixed fee.

The breaks are small and they surface late: a grant nobody approved, a SAFE signed for a different amount than the spreadsheet shows, an exercise never posted, a grant made after the plan ran dry. When the other side finds one first, the closing slips, the capitalization representation is wrong, and the cleanup is rushed.

Built forCorporate partnersEmerging companies lawyersCorporate paralegalsCompany CFOs

The Problem Today

Investor counsel will check each share, option and SAFE on the cap table before the round closes.

27 hours
of manual tie-out review for a Series B financing published
25,000
venture financings a year worldwide published

Tied out manually today

  • Consents
  • Grants
  • SAFEs
  • Ledger
  • Caught in their memo firstInvestor counsel spots the missing consent before the firm does
  • Cleanup at the worst timeFixes drafted and paid for during the financing itself

The Solution

  1. Each record readConsents, grants, SAFEs and the ledger, each cited by page
  2. Rebuilt from documents aloneThe cap table rebuilt line by line, never from the spreadsheet
  3. Breaks itemized by sharesEach break shows the document its share count depends on
  4. Fixes drafted, partner signsRatifying resolutions and ledger entries drafted for approval

Built-in controls

  • Agents never send, sign or file anything
  • Each break closed by a lawyer, with a reason
  • Matter files are not used to teach any model

What You Get

Counsel closes on a capitalization the other side can verify, with the cleanup done before diligence.

4 hours
of associate review for a Series B, down from about 27 our estimate
  • Ratifications drafted for youResolutions and stockholder consents, ready for the partner
  • A pro forma you can signThe round repriced on the corrected share count
  • SAFEs converted from their termsEach SAFE converted from its own signed amount and cap
Read, rebuild, tie, fix, sign

What cap table reconciliation does on each of its nine screens

Nine screens in the sequence a tie-out follows, each naming who uses it and what it saves them.

  1. 01Records read

    Every data-room document read and cited, page by page

    How it works

    • Charter, consents, grant agreements, exercise notices, SAFEs, wires and the stock ledger, shelved by kind
    • 388 documents and 6,412 pages, one square per document
    • Each square marked read, relied on by a line, behind a break or unreadable
    • Uploads are read as they land: 3 more, and no new break

    Corporate paralegalSees which records the tie-out rests on, and which scans could not be read, before the associate starts on the lines.

  2. 02Rebuild and tie-out

    The cap table rebuilt from documents alone and laid against the export

    How it works

    • The rebuild takes no figure from the company’s spreadsheet
    • Each export line sits beside its rebuilt line, with a tie gutter between
    • 214 lines on the export: 208 tie to a document and 6 break

    AssociateOpens the tie-out with the breaks already found, where a manual review of a Series B takes about 27 hours.

  3. 03Dependency chain, line 47

    Each break opens on the document chain its share count depends on

    How it works

    • Filter the grid to the six breaks, then click a line
    • Plan reserve, board approval, grant agreement, exercise price and option ledger, link by link
    • Line 47: 12,500 options granted, none of 12,500 approved
    • The missing link is named: consent BC-2024-10 approves 14 grants and leaves this one out

    AssociateSees exactly which approval is missing, with its source page one click away and the chain already traced through the data room.

  4. 04Plan reserve and grant checks

    The plan reserve replayed grant by grant, with five checks on each

    How it works

    • Grants and plan amendments replayed in date order
    • Each grant checked five ways: board approval, plan room, authorized shares, valuation and ledger
    • 160 grants pass all five, and 4 break
    • Line 201 took 30,000 options with 25,300 left: 4,700 shares over for 39 days, until stockholders approved the increase

    Emerging companies partnerLearns that a grant ran past the plan before investor counsel does, and that its fix needs the stockholders as well as the board.

  5. 05SAFE conversions

    Each SAFE converted from the terms its investor actually signed

    How it works

    • Purchase amount, post-money cap, discount and side letters read from each signed SAFE
    • A $40,000,000 cap over 24,000,000 shares gives $1.6667
    • SAFE #3 was signed and wired at $1,025,000; the export carries $1,000,000
    • All four convert into 2,415,000 shares, rounded down as the SAFE says

    AssociateConverts the SAFEs from the paper the investors signed, so a wrong amount in the spreadsheet does not carry into the price of the round.

  6. 06Decide a fix

    Each break decided on its card: accept, change or ask the client

    How it works

    • The six breaks drawn as one bar of 61,200 shares
    • Each card gives the break, the document and the proposed fix
    • A written reason with every decision, kept on the record
    • Line 211: the signed SAFE and the wire agree, so the export is corrected

    AssociateDecides six fixes in one sitting, each with a reason the partner can read later, in place of a spreadsheet comment nobody signs.

  7. 07Cleanup drafts

    Ledger entries and ratifications drafted onto the closing checklist

    How it works

    • Each accepted fix turns into the document it needs
    • Ledger entries: cancel 18,000 shares on line 9 and issue 6,000 common on line 88
    • A board ratification for line 47 joins the closing checklist once added

    Corporate paralegalGets the ledger entries ready to post, each tied to its notice, while the break itself stays with the associate to close.

  8. 08Pro forma and sign-off

    A pro forma that reprices the round once the breaks are fixed

    How it works

    • Fully diluted by class, as exported or after the fixes
    • The pre-money count moves from 25,200,000 to 25,192,000
    • The price moves from $6.6667 to $6.6688 a share
    • The lead investor takes 4,498,571 shares in place of 4,500,000

    Emerging companies partnerSigns the capitalization sign-off for the purchase agreement once each break is decided, knowing the price per share rests on documents.

  9. 09Audit trail

    An audit trail of who read, tied, decided and approved

    How it works

    • Agent steps and people’s decisions in one timeline
    • Each decision carries the reason given at the time
    • The record is retained for 7 years after the file is closed

    Practice support managerAnswers a later question about who changed a share count, and why, from one record rather than a chain of emails.

Six breaks hide 61,200 shares in a Series B data room

One rebuild found these before investor counsel opened the data room, so none of it became cap table cleanup in the last week.

LineWhat brokeSharesProposed fix
47Option grant signed, with no board approval12,500Ratifying resolution by the board
9Repurchase of unvested shares left on the export18,000Correct the cap table
211SAFE signed and wired for $1,025,000, exported at $1,000,00015,000Correct the cap table and the conversion
88Exercise paid for, never recorded in the ledger6,000Record the issuance in the stock ledger
112Offer email promised more than the board granted5,000Correct to 15,000, or a new grant
201Granted beyond the plan reserve4,700Ratifying resolution by the board and stockholders

The associate decides each fix, and only the partner approves a ratification

Agents prepare the tie-out. Lawyers close it, with duties kept apart.

Associate
Sees
The grid of breaks, each with its document chain and proposed fix
Signs
Accepts or changes each fix, giving a reason; may not approve ratifications
Emerging companies partner
Sees
The drafted resolutions and the pro forma after the fixes
Signs
Approves the ratifications and signs the capitalization sign-off
Corporate paralegal
Sees
The data room, the scans that could not be read and the drafted ledger entries
Signs
Posts ledger entries, and cannot mark a break closed
Client CFO
Sees
Corrections to the company’s own spreadsheet, each with its document
Signs
Confirms the spreadsheet corrections
Practice support manager
Sees
Tie rules, roles and retention for the practice
Signs
Sets the rules and takes no deal decisions
Around the grid

More of the cap table tie-out: passages, wires and corrections

What the associate, the paralegal and the client open beside the grid.

The consent that leaves line 47 outA citation click shows the source passage: the board consent’s schedule of 14 grants, with no entry for line 47.
A repurchase the export missedLine 9 lists 864,000 shares. A repurchase notice bought back 18,000 unvested shares, and the ledger cancels them; the export still counts them.
The wire behind SAFE #3The incoming wire confirms $1,025,000.00 as the SAFE 3 purchase amount, so the conversion follows the signed paper.
Six breaks, all decidedEach card keeps its document and its fix. With 0 of 6 left to decide, the sign-off can go to the partner.
Corrections for the client’s spreadsheetThree lines for the CFO to confirm, 864,000 to 846,000, 600,000 to 615,000 and 20,000 to 15,000, each with its document.
Tie rules the practice sets onceZero shares of tolerance, SAFE conversions rounded down, signed documents as the evidence, and five approval checks on each issuance.

Agents rebuild and tie the cap table; a lawyer closes every break

Reading, rebuilding, tying, checking, converting and drafting are split six ways, with the limits of each listed beside it.

Record reader

Reads each consent, grant, SAFE, notice, ledger and charter page, and extracts each issuance and approval with its page.

  • Never edits a figure
  • Never reads the cap table export as evidence
Rebuilder

Rebuilds the cap table from the documents alone, line by line.

  • Never fills a gap from the company’s spreadsheet
Tie-out agent

Lays each export line against its rebuilt line and itemizes each difference by share count.

  • Never closes a break
Approval checker

Checks each issuance for a board approval, room in the plan reserve and the charter, a current valuation and a ledger entry.

  • Lists what is missing, and never rules an act valid
SAFE converter

Converts each SAFE from its signed amount, cap, discount, most-favored-nation clause and side letters.

  • Never assumes a term it has not read
Cleanup drafter

Drafts ratifying resolutions, stockholder consents, ledger entries and closing checklist items.

  • Never sends, signs or files anything

Cap table reconciliation, the questions financing counsel raise

What is cap table reconciliation?

Cap table reconciliation, often called a cap table tie-out, proves that each line of a company’s cap table rests on signed documents: an agreement, a board approval, room in the plan and the charter, and a ledger entry. This solution rebuilds the cap table from the data room alone, ties it to the company’s export line by line, and lists each break by share count.

What happens when the board never approved a grant?

The break shows the grant agreement, the consent that should have approved it and the page each was read from. A drafted resolution for the ratification of defective corporate acts follows, with a stockholder consent where the original act needed one. Both wait for the partner’s approval before anything goes to the company.

How does SAFE conversion work?

Each SAFE is converted from its own signed terms: purchase amount, valuation cap, discount, most-favored-nation clause and side letters, checked against the wire that funded it. When the spreadsheet carries a different amount, the conversion follows the signed SAFE and the difference is listed as a break.

Does it use the company’s cap table spreadsheet?

Only as the thing being tested. The rebuild reads signed documents and the stock ledger, so a mistake in the spreadsheet shows up as a break instead of being copied into the answer.

Who can close a break?

A lawyer, giving a reason. The associate accepts or changes each fix, and the partner approves ratifications and signs the capitalization sign-off. The paralegal posts ledger entries but cannot mark a break closed.

How does it change cap table due diligence on a priced round?

The tie-out runs the day the data room lands, so each break and missing approval is listed and fixed before investor counsel writes the diligence memo. The pro forma is repriced on the corrected count, and the capitalization representation in the purchase agreement rests on cited documents.

Corporate, M&A & Securities

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Find the missing board consent
before investor counsel does.

Pick a financing your firm has already closed: its cap table comes back rebuilt from the data room, tied to the export and broken out by share count.

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