How to choose the Right Equity Management System for your Company?

Why Do You Need an Equity Management Tool?

Before we dive into how to choose the right equity management system, let’s first understand why you need an Equity Management System to manage something that can be handled in the good ol’ spreadsheets.. Well, you can’t deny that managing

To start with, how to choose the right equity management system. First, we need to understand why an Equity Management System is required in your company. Managing ESOPs on a spreadsheet becomes overwhelming and inefficient. As stock allocations and vesting schedules grow more complex, maintaining accurate records becomes a complicated task. The difficulties increase when addressing individual employee questions or navigating significant company events, such as mergers or acquisitions, where precise information and personalized attention are necessary.

Maintaining ESOPs in a spreadsheet is a huge mess when it comes to updating all the information of the employee. However, an equity management software is revolutionizing how employees’ ESOP data is maintained.

But, before you zero in on an equity management system to streamline everything, the question arises - Why is Equity Management required?

So let’s delve a little into why you need equity management in the first place.

The Critical Components of Equity Management

Equity Management necessitates the effective and systematic handling of key components such as CapTable management, ESOP administration, investor relations, and board management.

CapTable Management: The Capitalization Table provides a detailed overview of a company’s ownership structure, listing all stakeholders and their respective equity ownership percentages. CapTable management involves continuous updates to reflect the change of ownership that occurs due to transactions like share issuances, buybacks, option exercises, and equity grants. Keeping the CapTable up-to-date is essential as it is needed for making decisions related to funding, mergers and acquisitions, and overall corporate governance.

ESOP Administration: Employee Stock Ownership Plans (ESOPs) play a vital role in equity management, where companies provide employee equity-based compensation as a reward to retain and motivate their employees. Managing ESOPs involves the creation, execution, and administration of these plans, which includes awarding equity to employees, setting vesting schedules, tracking the performance and value of the ESOPs, and ensuring compliance with relevant regulations and accounting standards. Proper ESOP management is crucial for attracting and retaining good talent and aligning employee objectives with the company’s success.

Investor Relations: Investor Relations is responsible for managing communication and relationships between a company and its investors, including shareholders, potential investors, and analysts. In the context of equity management, this function ensures that investors receive timely, accurate updates on the company's performance, financial status, and other important factors that can impact their investment decisions. Clear and Open communication helps in maintaining & building trust and confidence in the company and its management.

Board Management: Equity Management in the context of board management involves managing the relationship between the board members and their shareholders. The board of directors is responsible for safeguarding the interests of shareholders and overseeing the company’s management. A board of directors ensures that the board acts and makes the right decision in the best interest of the company and its shareholders.

After understanding the critical components of equity management. Now, the question is which Equity Management Platform is right in a market full of options for equity management software where various features and key considerations are offered? Well for that, we have curated the key criteria you must look at while selecting the best equity management system according to your requirements.

Things to Consider Before Selecting an Equity Management System for Your Company

1. Easy to Use

Any new software comes with an erudition curve, but it’s important to pick software that you and your employees find easy to use and understand. However, most equity management software turns out to be difficult to understand and use due to every user needs training on how to use the software.

2. Easy Scalability

To understand this, let's take an example of a Company where they have onboarded 50 ESOP holders at the initial stage but later the management decided to add 200 ESOP holders additionally. This is where easy scalability is needed.

An ESOP management system must offer effortless scalability and seamless customization that is needed for onboarding employees anywhere from 100 to 10000. A particular way is to use software that enables customization of the package according to the needs of a growing Business, as Xumane Equity does.

3. Cost-Effective

Using an equity management system should be cost-effective in the long run. It must reduce the need for manual labor, minimize the risk of errors, and save time. It also reduces the risk of compliance issues and legal disputes, which can be costly for companies. Moreover, what appears affordable today might not maintain its cost-effectiveness as the number of ESOP holders increases.

After understanding what needs to be considered before planning for an equity management system, now it’s time to highlight must-have features in an equity tool that should be there in a tool.

4 must-have features in an Equity Management System

1. Robust Dashboard

A good dashboard plays an important role in an equity management system. A user-friendly and easy-to-understand dashboard can make it easy for founders, human resource personnel, and employees to track the lifecycle of their ESOPs.

The right software can eliminate paperwork errors by offering a unified view of individual statements and enhancing structural efficiency.

2. Secure Data Storage

An ESOP management system must be encrypted using 128-bit encryption, two-way factor authentication, and a firewall between the public and company domains. To protect the confidentiality and sensitive information of employee stock options data. It is important to have regular data backups.

3. Options for Customization

Every business has a different stock option plan, so selecting an ESOP management system that is adaptable and versatile is essential. It should be possible to modify the software to suit the company's unique objectives and plans by adjusting eligibility requirements, exercise prices, and vesting periods.

4. Store and Retrieve

Any scenario involving data must have reliable backup and recovery options. Startups must have strong backup and recovery procedures to smoothly restore crucial data and apps in the event of an unexpected occurrence. As a company grows, managing ESOPs becomes more complex.

The ESOP management system uses cutting-edge technologies and cloud-based solutions to help expedite this process and enable effective operations while maintaining control and monitoring.

So, when we know what things to consider and what features to check before selecting the right equity management system, it’s time to see what options are available in India.

Offerings of Xumane Why vs Other Competitors

Best Equity Management System in India

Why Choose Xumane?

If you're seeking a way to tailor your platform to meet your specific needs. Your greatest ready-to-go option will be Xumane.

As it provides a 360-degree view of your cap table and ESOP allocation in real-time. Unlike other platforms, Xumane can be customized to suit your needs and preferences. Every action is taken with an unwavering dedication to keeping the information in your company's ESOP pool safe and easily accessible.

The method assists in getting rid of a backlog of irregularities, miscommunication, and discrepancies in records. Rather, it helps in providing your team with the tools they need to do thorough tax and exercise calculations, enabling them to make wise choices.

However, the best part of the platform is that it boasts an efficient mobile app that is not similar to other equity management systems available in India.

Key features of Xumane

• Real-time dashboard (for employee and employer) for key ESOP metrics i.e. Granted, vested, unvested, lapse, balance pool, etc
• Bulk uploading of all the key tasks e.g. Grant, vesting, employee master, exercise, conditional vesting, etc.
• Fastest onboarding and Go Live in 48 hours.
• Multi-entity and multiple stock options mgt.
• Custom features like accelerated vesting, bonus issues, stock splits, and pro-rata vesting.
• End-to-end workflow for smooth ESOP exercise with real-time tracking and payment facility.
• Key ESOP reports and compliances for faster audit closers.
• API integrations and SSO.
• Digital Grant Letters with unlimited E-signature facility
• Real-time sync with the stock exchange to capture the current price of listed entities.

Final Thoughts

In conclusion, we would like to say that managing employee stock options is critical to talent retention and company growth. While some solutions may be more affordable but may sacrifice user experience and support, others may be more cost-effective but do not scale as well. The perfect platform should offer both basic and advanced features, scale with business needs, and speed up ESOP procedures.

Retaining talent and expanding the business both depend on effective employee stock option management software. As you evaluate choices, take into account elements like data security, real-time tracking, integration, customization, compliance, and user interface. Tools like Xumane Equity help improve ESOP administration, lower errors, and support business objectives. View product demos to make sure it's the right fit before making a decision.

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