Blum Holdings Inc (BLMH)

[BidnessMan]

How Does a "Buyback" Work?



There are two ways that companies conduct a buyback: a tender offer or through the open market.
1. Tender Offer

The company shareholders receive a tender offer that requests them to submit, or tender, a portion or all of their shares within a certain time frame. The offer will state the number of shares the company wants to repurchase and a price range for the shares. Investors who accept the offer will state how many shares they want to tender along with the price they are willing to accept. Once the company has received all of the offers, it will find the right mix to buy the shares at the lowest cost.

The market typically perceives a buyback as a positive indicator for a company, and the share price often shoots up following a buyback.
2. Open Market

A company can also buy its shares on the open market at the market price. It is often the case, however, that the announcement of a buyback causes the share price to shoot up because the market perceives it as a positive signal.

https://www.investopedia.com/articles/02/041702.asp