What You Need to Know When You Sell a Cap Table Note
A Cap Table Convertible Note is one of the leading products used for investors seeking to sell their cap stocks in the secondary market. The company is called Capstone. They offer a three year money back guarantee, and a twenty four month risk free trial offer. This product allows an investor to convert their cap stocks into cash, without having to sell.
It is important to note that many investors think they can "sell" a cap stock without selling a note. The truth is, this is not possible. While it is possible to buy a note and then sell it later, most investors are required to first trade their cap stock. If you try to sell a note on your own, you must first have your broker send the purchase order to the underwriter. Next you must wait for the underwriter to approve the sale, and then you must send the check to the buyer. In the end, you must wait for your buyer to post your check, then you must send the applicable taxes.
If you cannot sell the note because you need the cash now, what do you do? There are a couple of answers here. First, you can take out a loan with your mortgage company or credit union. This could be a good option if your financial situation has changed since the note was issued. Also, if you are a business that is making money and you want to provide long term benefits to your investors, a convertible note may be the answer.
One thing you need to know before selling your cap table is how to write the document that tells the company how much they should pay you. You'll find this is the most difficult part of the process. Most people who sell their notes have no experience writing the actual documents involved. Your notes' administrator will be able to help with this process, but you'll still need to have some help doing this.
Once you have all the documents in order, the last thing you need to do is arrange to have the convertible note reviewed by an independent auditor. This person will review the document to make sure there are no mistakes and that it accurately reflects the cash offer you are offering. Reviewing the document ensures that there are no errors in the pricing and that the total price will reflect the appropriate market price at the time of the sale. This will ensure the company gets what it is offering, and it assures that you don't get stuck paying more than you should.
If you decide to use an independent auditor, you will also need to give them access to the original source of your cap table. You should keep this confidential, especially if the review ends up giving the note holder different offers. The reviewer will provide his findings and recommendations to you, and you will use these in negotiations with the company. You won't need to share the results with the cap table holder; in fact, most note holders prefer not to know what the internal reviews say.
Since the convertible note is a unique kind of financial instrument, it can be hard to buy, sell, or trade. In order to deal with it properly, it helps to have someone working on it for you. Of startups , there are several companies that offer this service, but they generally charge a high fee. A better alternative is to work with an independent financial broker. A good broker can offer convertible note brokerage services that will help you manage your portfolio and avoid common pitfalls.
startups of the biggest benefits of using an independent broker to buy and sell your convertible note is that you don't have to worry about being "tricked" by a salesperson or sold a note that doesn't have the right terms. The best companies will be able to explain the differences between notes, and explain the reasons why one company's terms are better than the other's. They can show you potential cash flow scenarios that may affect the amount you will be able to sell your note for, as well as any other fees or charges that could be attached to the note. Independent brokers often have relationships with many different companies, making it easier for you to compare notes from multiple buyers.