Share buyback

A buyback can distribute surplus cash, alter capital structure or provide a route for shareholders to sell. It reduces shares outstanding if purchased shares are cancelled or treated accordingly, which may raise EPS mechanically even without operating improvement. Assess the price paid relative to value, funding method, liquidity, opportunity cost and legal constraints. A debt-financed buyback also changes financial risk. A repurchase does not automatically create value for continuing shareholders; overpayment can transfer value to sellers at their expense.