A buyback, or share repurchase, occurs when a company purchases its own outstanding shares from the open market or existing shareholders. Companies do this to reduce the number of available shares, potentially boosting the value of remaining shares, preventing dilution, returning excess cash to shareholders, and as a defense against takeovers. It can also enhance earnings per share and serve as a tax-efficient method of returning value to shareholders. Buybacks are subject to regulations and are announced to ensure transparency.
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