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My firm has been asked a lot recently by client board members about stock
buybacks. Though I obviously don’t speak for all current/former institutional investors,
my answer is nearly always the same (spoiler alert: these are generalizations).
 

If your micro- or small-cap company is unprofitable, don’t buy back your stock.

If your micro- or small-cap company has raised outside capital in the last 18 months,
or will need to in the next 18 months, don’t buy back our stock.

If you consider your micro- or small-cap company to be a “growth” company, use
any/all extra capital to… grow.

If your micro- or small-cap company feels it has no additive use for excess capital,
then perhaps you’re not actually a growth company.

If your micro- or small-cap company feels it has no additive use for excess capital,
then just give it back to shareholders directly.

To the tiny percentage of wildly cash-flowing, institutionally-owned, slow growth micro-
and small-caps… knock yourself out.

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ADAM J. EPSTEIN

A globally recognized small-cap expert, Mr. Epstein has advised, governed, and invested in hundreds of small-cap companies. His capital markets and corporate governance acumen are products of a singular perspective – a former corporate attorney, operating executive, institutional investor, and, now, board advisor. As Bloomberg Businessweek commented regarding Mr. Epstein’s category-defining corporate governance book, “attention, directors of small-cap companies. Help is on the way.” 

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