Software-as-a-service equity management platforms ('EMPs') have emerged in recent years to simplify and streamline the issuance and management of securities for private companies and their lawyers by taking documents and processes previously reliant on paper and making them electronic. By allowing users to electronically issue, sign, and manage stock certificates, options, and other convertible securities, EMPs can save time for lawyers/paralegals and reduce legal costs for clients. EMPs provide various other benefits as well, including automated compliance checks, pro forma financing and exit scenario modeling, and inexpensive 409A valuations. However, despite the cost-savings and other benefits to using electronic equity management platforms, there are also new risks in using these platforms, such as data loss, data breach, and lack of data access. Overall, if the risks are properly managed and the cost structure makes sense, EMPs can be a smart choice for companies and lawyers looking for greater efficiency, convenience, and lower costs in the issuance and management of securities.
Electronic Equity Management Platform for Privately-Held Companies: Benefits, Risks, and Costs,
Emory L. J.
Available at: https://scholarlycommons.law.emory.edu/ecgar/vol4/iss2/2