The Perfect Corporate Board: A Handbook for Mastering the Unique Challenges of Small-Cap Companies

CHAPTER 12TOWARD A BETTER UNDERSTANDING OF STOCK BUY-BACKS AND REVERSE STOCK SPLITS

Buy-Backs and Reverse Splits

Key considerations for directors:

• Buy-backs and reverse stock splits are often better in theory than in practice—especially for many small-cap companies.

• Historic data are the best tool for directors to use in gauging the likely effectiveness of buy-backs and reverse stock splits.

• Buy-backs often don’t succeed in stock price appreciation for many small-cap companies.

• Reverse stock splits to maintain senior exchange listings face uphill battles.

Common mistakes to avoid

• Relying on advisors instead of data to help analyze the likely effectiveness of buy-backs and reverse stock splits.

• Undertaking buy-backs in the absence ...