Share Repurchase

A share repurchase program is a measure implemented by cash-rich corporations to concentrate the ownership by purchasing equity shares at a premium to market value. Private companies can use share repurchase programs to accrete the ownership of upper level management, lever up the balance sheet and thwart the threat of a takeover. Share repurchases lead to decreased equity capital of the private company. Private companies that have the cash to do so can make a tender offer in order to reduce the number of shareholders and concentrate ownership and control of the company.