Types of Share Buybacks

Types of Buyback

There are several types of share buybacks, including:

1. Tender Offer

• A company makes an offer to its shareholders to buy back a specific number of shares at a fixed price.
• Shareholders can choose to accept or reject the offer.

2. Open Market Purchase

• A company buys back its shares from the open market through a stock exchange.
• The company can set a maximum price it is willing to pay for the shares.

3. Fixed Price Tender

• A company offers to buy back a specific number of shares at a fixed price.
• Shareholders can choose to accept or reject the offer.

4. Dutch Auction

• A company offers to buy back shares at a range of prices, and shareholders can bid for the price at which they are willing to sell.
• The company then buys back shares from the lowest bidder upwards until it reaches the desired number of shares.

5. Proprietary Trading

• A company buys back its own shares through a proprietary trading desk, usually through a broker-dealer.
• This type of buyback is often used for small, periodic purchases.

6. Accelerated Share Repurchase (ASR)

• A company buys back a large number of shares from an investment bank or other financial institution.
• The investment bank sells the shares to the company at a fixed price, and then buys back a similar number of shares from the market over time.

These are the main types of share buybacks, and companies may use a combination of these methods to achieve their goals.

Types of Share Buybacks

• A company can use various methods to repurchase its shares from shareholders, including tender offer, open market purchase, fixed price tender, Dutch auction, proprietary trading, and accelerated share repurchase.

Tender Offer

• A company makes an offer to its shareholders to buy back a specific number of shares at a fixed price.
• Shareholders have the option to accept or reject the offer.

Open Market Purchase

• A company buys back its shares from the open market through a stock exchange.
• The company sets a maximum price it is willing to pay for the shares.

Fixed Price Tender

• A company offers to buy back a specific number of shares at a fixed price.
• Shareholders can choose to accept or reject the offer.

Dutch Auction

• A company offers to buy back shares at a range of prices.
• Shareholders bid for the price at which they are willing to sell.
• The company buys back shares from the lowest bidder upwards until it reaches the desired number of shares.

Proprietary Trading

• A company buys back its own shares through a proprietary trading desk.
• This type of buyback is often used for small, periodic purchases.
• A broker-dealer is usually involved in the process.

Accelerated Share Repurchase (ASR)

• A company buys back a large number of shares from an investment bank or financial institution.
• The investment bank sells the shares to the company at a fixed price.
• The investment bank then buys back a similar number of shares from the market over time.

Learn about the different methods a company can use to repurchase its shares, including tender offers, open market purchases, and fixed price tenders.