What is a Buyback agreement?
A Buyback Agreement refers to the process that a company goes through to purchase back any unresolved shares on the open market. These are usually shares that come available when a shareholder leaves the company, they want to reduce the possibility of any partner having a controlling stake or they want to increase the value of the company’s shares by reducing the number of available shares. A Buyback agreement is essentially a way of repaying capital to shareholders.
How is a Buyback Agreement beneficial to your business?
A buyback Agreement offers a way for companies to invest in themselves internally. It is a way of giving investors a return as well as making your company more valuable.
Another great feature of having Buybacks within your company is the chance to motivate your employees with stock options and rewards and to not dilute the stocks of existing shareholders. Having a firm agreement on your company’s stock options invariably creates value, ambition and clarity to your company’s structure.