Top 10 Practice Tips: Stock Repurchase Programs

This practice note includes 10 practice tips that may help you, as counsel to a public company or a repurchase agent, in implementing a stock repurchase program on behalf of your client. A stock repurchase program enables a company to buy back a certain number of its outstanding securities.
In recent years, the repurchase activity undertaken by US public companies has significantly increased, in part as a result of the tax reforms implemented in 2018.

When considering adoption of a share repurchase program, companies should consider the sharp public criticism of such programs, which has become more heightened immediately after the commencement of the COVID-19 pandemic. Nonetheless, share repurchase activity increased substantially in 2021. Many companies that have completed recent significant strategic transactions have concurrently undertaken sizeable share repurchases. Shares repurchased by a company are either canceled or kept as treasury stock, which thereby reduces the number of outstanding shares and usually has the effect of increasing the company’s earnings per share.

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