Pulley vs. Carta: What a Brokerage Cap Table Actually Covers

The firm's cap table should reflect ownership of the brokerage itself: who owns the operating company, what percentage each principal or investor holds, and any equity granted to a senior originator as a retention tool. That is the scope Pulley or Carta is actually built to manage.

A principal's personal stake in a deal participation, a co-investment in a borrower's project, or a side vehicle set up to hold a piece of a specific transaction does not belong on the firm's cap table at all. It belongs on that principal's own personal record, and conflating the two is where brokerages get into trouble.

Say a principal puts personal capital into a borrower's redevelopment project alongside originating the loan for that same deal. That co-investment is real money at real risk, and it deserves its own record, but it is not an ownership stake in the brokerage and should never appear alongside the firm's own shareholders on the same cap table.

A principal who holds an undisclosed stake in a borrower entity has a direct conflict of interest on any deal involving that borrower, and most brokerage compliance policies require disclosure of exactly this kind of position. If nobody is tracking these side stakes anywhere, the firm has no way to catch a conflict before it becomes a problem with a client or a regulator.

The fix is a separate disclosure log, reviewed regularly, not an attempt to force personal deal positions into the same cap table tool that tracks firm ownership.

For a brokerage with a small group of principals and a straightforward ownership structure, Pulley is enough to keep the firm's own cap table current, including any equity granted to a producing broker as part of a retention package.

It has no concept of, and should not be asked to track, the deal-by-deal participations principals hold outside the firm.

That narrower scope is a feature here, not a gap. A brokerage trying to force personal deal positions into the firm's cap table software ends up with a record that mixes two unrelated kinds of ownership, which makes the firm's actual equity picture harder to read for anyone who needs it, including a future lender or acquirer.

Carta becomes more relevant once a brokerage has grown into a larger, more institutional structure, perhaps with outside investors in the firm itself, or once it wants compensation benchmarking to structure producer equity offers competitively against other firms in the market.

Its broader reporting also helps if the firm is preparing for an acquisition by a larger platform, since an acquirer will want a clean ownership history of the firm alongside a separate, honest accounting of what principals hold elsewhere.

That second point tends to matter earlier than firms expect. A platform evaluating an acquisition will ask about principal side positions as part of diligence regardless of which cap table tool the firm uses, so the disclosure discipline described below matters more to that outcome than the software choice itself.

Create a simple annual disclosure where every principal lists any deal participation, borrower co-investment, or side vehicle they hold, along with the counterparty and the approximate stake. This is not a cap table exercise, and it does not belong in Pulley or Carta.

Review it against active and pipeline deals to catch conflicts before they surface with a client. A brokerage that has never run this exercise likely has more undisclosed positions than anyone assumes, simply because nobody has ever asked the question directly.

Make the disclosure a condition of originating, not an annual formality filled out once and forgotten. A principal who takes a new co-investment position in March should not wait until the next January review to note it, especially if that borrower has an active loan in the pipeline in the meantime.

Each principal's annual disclosure should list the following:

• Every deal participation the principal holds, along with the counterparty and the approximate size of the stake.
• Any co-investment in a borrower's project, especially where the principal also originated or advised on the loan for that deal.
• Any side vehicle set up to hold a piece of a specific transaction, kept on the principal's personal record instead of the firm's cap table.
• A cross-check against active and pipeline deals, so conflicts surface internally before they reach a client or a regulator.