Equity Management Software Implementation Guide

The success of your equity management software solution relies as much on the implementation process as it does on the technology selection. Since equity compensation plays a critical role in your organization, it’s essential to avoid these five common mistakes to set your company up for efficiency and savings from the start.

Mistake #1: Implementing a system that is not comprehensive

Some equity management systems are built only to administer stock options and do not have cap table functionality. Others have stock option administration but are weak in accounting and tax functionality.

• If you purchase a system with only a partial set of features, you will not replace your spreadsheet. Instead, you’ll end up with a system and a spreadsheet or multiple spreadsheets.

Mistake #2: Converting part but not all of your history

While it may take longer to implement, converting all of your history to a system serves two important purposes:

1. It allows you to reconcile back to the beginning of your data and clean up any issues that may be outstanding in your spreadsheet.
2. It avoids the need for having a system and a spreadsheet. If you only have part of your data in the system, you may still need to go back to a spreadsheet for reporting purposes.

Mistake #3: Assuming that all your historical data is accurate

Spreadsheets are prone to errors. If you simply populate from spreadsheet to system without any checks and balances or logical reconciliation, you are doing yourself a disservice. Bad data in equals bad data out.

• Instead, make the implementation an opportunity to audit and clean up your data since it is being massaged for system input anyway.
• We have found errors in every client’s equity management system implementation, whether it was managed in-house or by a third party.

Mistake #4: Waiting until after your audit (especially if it’s your first audit)

Your audit is an opportunity for your auditors to get comfortable with your data in a new system and potentially a new (cleaner) format. We recommend implementing a software solution prior to your audit and preparing any historical reconciliation for your auditors in addition to the current year.

This is even truer if your company will be going through its first audit.

• Implementation and use of equity management software gets your auditors comfortable with the system and the reporting formats from the beginning of their relationship with your company.
• In addition, a system can more easily and more quickly calculate all of your historical stock-based compensation if you have not already done so.

Mistake #5: Implementing an interim system that’s tailored to private companies if you have plans to go public

Few equity management software systems on the market today are truly built to take you public. If your company has aspirations to go public, don’t get a system that is not robust enough to make the transition from private company to public company reporting.

• Consider public company reporting needs, broker interactions, participant interface, and the software company’s public client base before making a final purchasing decision.

Set Your Equity Management Software Implementation Up for Success

Need some assistance reviewing your data, cleaning up and reconciling your history and selecting and implementing the right equity management solution? Find out how our Equity Management Consulting team can help you prepare for and implement flexible software tailored to your reporting needs and budget.