Cap table

Definition

The record of who owns what share of the entity that is making the acquisition.

Why It Matters

Anyone raising outside equity negotiates this before the deal closes, and the figure that decides the outcome is not the percentage on day one but what is left once the preferred return and the promote are paid. Build the waterfall before agreeing to terms, because the same headline split can pay very differently depending on where the money starts flowing to you.

In numbers: With $600,000 of investor equity carrying an 8% preferred return, a sale three years later has to clear about $755,000 before a searcher's 25% share is worth a dollar.