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Overview

The OperatingAssumptions object is where you define the discretionary, variable financial and strategic decisions for your ESOP on a year-by-year basis. You will create many different OperatingAssumptions objects to model various “what-if” scenarios and plan for the future.
Source of Truth: Your company’s financial forecasts and strategic plans.

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Complete Field Reference

Below is a detailed walkthrough of each field in the OperatingAssumptions object.

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contribution_policy

  • Type: object
  • Required: Yes
  • Description: Defines your company’s policy for making contributions to the ESOP.
  • Type: string
  • Values: "fixed_amount", "percentage_of_payroll"
  • Description: The method for calculating the annual contribution.
  • Type: number
  • Description: Required if type is "fixed_amount". The total dollar amount to be contributed.
  • Example: 500000
  • Type: number
  • Description: Required if type is "percentage_of_payroll". The percentage of total payroll to contribute.
  • Example: 0.10 for 10% of payroll.

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share_valuation

  • Type: object
  • Required: Yes
  • Description: Defines the current and projected future value of the company’s stock.
  • Type: number
  • Description: The current price per share of the stock, typically from your most recent 409A valuation.
  • Example: 100.00
  • Type: number
  • Description: The projected annual growth rate of the share price.
  • Example: 0.05 for 5% annual growth.

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repurchase_strategy

  • Type: object
  • Required: Yes
  • Description: Defines how and when the company will repurchase shares from terminated participants.
  • Type: string
  • Values: "immediate", "deferred"
  • Description: Whether shares are repurchased immediately upon distribution or deferred.
  • Type: string
  • Values: "trust_cash", "company_contribution", "company_loan"
  • Description: The source of funds for repurchasing shares.

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financial_projections

  • Type: object
  • Required: No
  • Description: Your company’s financial projections, which can influence other assumptions.
  • Example: 
    "financial_projections": {
    "revenue_growth_rate": 0.10,
    "ebitda_margin": 0.15
}

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Complete Example

{
  "contribution_policy": {
    "type": "fixed_amount",
    "annual_amount": 500000
  },
  "share_valuation": {
    "current_price": 100.00,
    "annual_growth_rate": 0.05
  },
  "repurchase_strategy": {
    "timing": "immediate",
    "funding_source": "company_contribution"
  },
  "financial_projections": {
    "revenue_growth_rate": 0.10,
    "ebitda_margin": 0.15
  }
}