Constructing a Cap Table for the PPM

May 13, 2022

by an investor from University of Birmingham in London, UK

I have recently had conversations with a couple of potential investors.

After having shown them my PPM, some have mentioned that it was lacking a cap table. I have struggled to find any examples of cap tables specific to search funds. I was wondering if anyone has had experience in building search fund cap tables to slot into the PPM?

Are search fund cap tables the same cap tables that one would expect to find in other asset classes? Are there any details specific to search funds that are important to include?

Thank you for any insight that you may be able to give.

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Reply by a searcher
from Ivey Business School at Western University in Toronto, ON, Canada

In addition to Jack's response, maybe they're looking to understand how many units you're looking to sell so they can understand their ownership. Do you state in your PPM how much you're specifically looking to raise and how many units that equates to? This is important because investors will need to come in for their pro-rata amount come the acquisition capital call.

For example, you can say something like "I'm looking to sell 10 units at $50,000 each." That way if I'm an investor and I want to purchase 1 unit, I know my allocation of an acquisition capital call would be 10%. This provides a good idea upfront as to how much capital they're realistically committing to provide (should they choose to exercise their right).

Reply by an investor
from Harvard University in London, UK

Hi Darnell - I agree with what others have already said RE the importance of clarity on unit prices and number of units. Speaking just from my own experience investing in traditional search in the UK and Western Europe, it is very unusual to include a cap table in the PPM, since this is likely to move around considerably through your fundraising process. Orlando’s suggestion of sharing a ‘no-names’ investor list and indicative units is more common (usually shared in a document/email separate to the PPM), and may help to reassure investors who are looking to understand who else is involved.

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