Enter the employee’s annual salary, number of years worked, and the buyout rate into the calculator to determine the buyout amount. This calculator can also evaluate any of the variables given the others are known.
Employee Buyout Formula
The following formula is used to calculate the employee buyout amount.
BO = (S * Y * R) / 100
Variables:
- BO is the buyout amount ($)
- S is the employee’s annual salary ($)
- Y is the number of years the employee has worked
- R is the buyout rate (%)
To calculate the employee buyout amount, multiply the employee’s annual salary by the number of years the employee has worked. Then multiply the result by the buyout rate. Finally, divide the result by 100 to get the buyout amount.
What is an Employee Buyout?
An employee buyout (EBO) is a transaction where a company’s employees purchase the company from the current owner or parent company. This is often facilitated through the establishment of an Employee Stock Ownership Plan (ESOP). EBOs are typically used as a strategy for business succession, to avoid a hostile takeover, or to save a company from bankruptcy. The employees become the company’s shareholders, giving them a direct stake in the company’s future success.
