Should I take the buyout? What to weigh before you answer

What a buyout is and is not

A buyout, also called a voluntary separation or voluntary severance program, lets employees choose to leave for a package. A layoff is the employer’s decision. A buyout is yours.

Packages often pay a lump sum or weeks of pay per year of service, plus a health coverage subsidy, a set treatment of bonus and equity, and sometimes extra service credit toward retirement. Most ask you to sign a release of legal claims. A deferred resignation is a variant: you are paid to stay on the payroll until an agreed date and then leave.

Get these answers in writing first

• The deadline to answer, and who is eligible.
• Exactly what you receive and how it is calculated.
• How many months of health coverage, and at what cost to you.
• What happens to your bonus, unvested equity, pension credit and 401(k) match.
• Whether you can change your mind after signing, and for how long.
• What you give up: non-compete, non-solicitation, confidentiality and release terms.
• Whether the company will rehire you.
• What happens to your role and terms if you decline. Ask this plainly. Some companies follow a buyout with layoffs, and the offer itself will not tell you whether yours will.

A way to compare it with staying

Our severance calculator and layoff runway tool do this arithmetic with your numbers.

• Start with what you would receive after tax. A lump sum is usually withheld at a flat rate that may be above or below what you will owe.
• Add up your monthly costs, including health insurance you would now pay for yourself.
• Divide the package by that monthly figure to see how many months it covers.
• Compare that with how long a search for your kind of role realistically takes. Senior searches commonly take several months.
• Count what you would give up by leaving: salary, bonus, equity that is about to vest, pension credit and the 401(k) match.

When it tends to make sense, and when it does not

• It tends to make sense when you already wanted to leave, the package covers six or more months of costs, your role feels exposed and your skills are in demand.
• It tends not to make sense when equity or a pension milestone is close, the package is thin next to your costs, hiring in your field is slow, or someone who depends on you needs the health coverage.

Asking for more time or more money

Some offers have room and some do not. Asking politely does not cost you the offer.

• “Thank you for the offer. I need the full terms in writing and until [date] to decide.”
• “Before I decide, can we talk about [more weeks / health coverage through a set date / a vest date]? That would make this easier to accept.”

Frequently asked questions