Scale Your Equity Management as Your Company Grows With the Right Tools

In today’s highly competitive hiring market, aggressive growth companies are doing everything they can to attract and retain top talent. That means offering equity compensation plans that incentivize performance and encourage the best people to stay on board for the long haul.

Equity management can get complex quickly, especially as a company scales up. Maintaining cap tables through multiple funding rounds, onboarding new hires, closing out equity positions for departing employees, and statutory reporting all contribute to making equity management a particularly thorny challenge for high-growth organizations.

The best equity management tools make those processes faster and easier, helping companies  comply with regulatory reporting requirements while ensuring accuracy.

Equity Management Challenges for Growing Companies

In startups, small, and midsize companies, the job of equity management is usually not a full-time position. Instead, it’s generally handled by a person who splits time between equity management and other key functions in human resources or someone in the finance department.

For rapidly growing organizations, this approach poses a substantial risk. Often, the time required to perform equity management tasks increases considerably as the business expands. As a result, the responsible person’s workload grows significantly, at precisely the same time that they face greater responsibilities elsewhere. Equity management is simply too important to let fall through the cracks.

Equity management involves a lot of manual processes. Creating and maintaining cap tables, keeping investors up-to-date on their ownership stakes, allocating options to key employees, and statutory filings are all mission-critical. Even for a startup with just a handful of employees, it can be risky to manage all of that information manually. As a company grows, the risk of getting something wrong increases exponentially.

Manual processes are painful and time consuming. For a key staff person with multiple responsibilities, those processes can be overwhelming. Without tools to automate and streamline equity management, the responsible person will inevitably be faced with periodic influxes of time-sensitive tasks, including paperwork and other activities related to equity management. Good equity management tools offer support for these administrators, freeing them up to focus on the other elements of their job.

Automate Now To Save Headaches Later

Companies have increasingly turned to automation to streamline processes and improve efficiencies—driven by growing pressure to maximize productivity, manage lean finance and HR teams, and meet rising compliance demands without adding headcount. Automation saves time, increases accuracy, and ensures on-time compliance with regulatory reporting requirements.

Most growing mid-cap companies take advantage of the full range of award types available to them. This increases their ability to attract and retain top talent and implement compensation structures for top management that incentivize executives to deliver on critical performance objectives.

Each new award type brings with it a new set of challenges – including a host of reports required by the U.S. Securities and Exchange Commission (SEC) and calculations needed to comply with the Financial Accounting Standards Board (FASB) accounting guidelines and  International Financial Reporting Standards (IFRS). A good equity management solution automates those processes, simplifying and streamlining administration, increasing accuracy, and reducing risk.

Finance professionals using Certent Equity Management from insightsoftware report a 50–75% reduction in the time spent maintaining and updating their equity compensation programs, essentially eliminating the time previously spent tracking down grant acceptances from participants. The recurring benefits compound across every reporting cycle: customers cut audit prep time by 50–70%, supported by 400+ built-in reports that let auditors pull the data they need by region, grant type, or participant.

M&A Agility

Mergers and acquisitions (M&A) activity is increasingly common, as the global economy experiences a host of disruptive forces. Acquisitions offer growing businesses an opportunity to gain a foothold in new markets, fend off competitive threats, or acquire new intellectual property. To act quickly on such opportunities, companies must be capable of taking an “all hands on deck” approach to the acquisition process.

M&A activity calls for integrating data from acquired companies into a single stock plan database. Without the proper audit tracking functionality in your systems, this can be a major headache. A flurry of subsequent personnel changes can make the process even more difficult, as you must adjust or close out equity compensation plans in response to a merger. These are especially busy times for finance and HR, so the additional workload is doubly burdensome. A good equity management solution can ease this pain and accelerate the process of integrating an acquired entity, freeing up key personnel to focus on other aspects of the acquisition.

No two M&A events look alike, and neither do the equity challenges they create. That's why it is beneficial to have an equity management solution that pairs its platform with hands-on services or account support designed around your specific situation. It should deliver tailored solutions to ensure every client receives the appropriate level of support, tools, and resources.

Regulatory Compliance Risk

An effective equity management solution also reduces the risks associated with reporting compliance. Customers using Certent Equity Management can streamline ASC 718 compliance and reporting. Year-end activities, likewise, are faster and more accurate because companies can automatically generate tax statements (Form 3921 for ISO exercises and Form 3922 for ESPP stock transfers) with complete confidence in the resulting numbers.

This matters more than ever: IRS regulations finalized in 2023 lowered the mandatory e-filing threshold for these forms from 250 to just 10 returns, effective January 1, 2024—significantly expanding electronic filing obligations across companies of all sizes. Beginning in 2027, all Forms 3921 and 3922 must be filed through the IRS's IRIS system, replacing the legacy FIRE system. Equity management platforms that automate this process will be essential to staying compliant with these evolving requirements.

Certent Equity Management enables payroll administrators to synchronize important tax and employee demographic information with the payroll system, speeding the payroll cycle and eliminating risks commonly associated with hand-keying employee data. Managers can share data with their brokerage of choice, providing equity plan participants with a seamless experience.

Choose a Solution Built to Grow With You

To grow your business from five employees to 50,000, through multiple funding rounds, and eventually to an IPO and beyond, it’s important to select the right equity management solution. Certent Equity Management offers well-organized data for better decisions and enhanced communications. Ledger-based cap tables offer new levels of insight and analysis and a comprehensive view of stakeholder holdings from a trusted single source of truth.

As your company moves rapidly through its growth cycle and is faced with key decisions and opportunities, insightsoftware’s equity management solutions and services can scale with you. Certent Equity Management enables you to create high-impact distribution waterfalls to identify the pay-out for each class of security at any exit amount, so you can model and compare various term sheets and analyze the capitalization outcomes. It provides an engaging participant portal to improve communication, facilitate education, and simplify execution and settlement.

Just as importantly, Certent Equity Management offers you the flexibility to choose the broker who best serves your company’s needs. Unlike proprietary equity management solutions offered by brokerage houses, though, Certent Equity Management gives you freedom of choice. If you decide to change your preferred broker at any point down the road, you can make the switch without changing your equity management platform.

Whether you are a public or private company, Certent Equity Management software and services provide everything you need to manage, administer, account for, and report on equity compensation plans. Streamline your equity management, tighten compliance, minimize risk, and improve your productivity.