The paramount objective of investment is profit, and the imperative for return on investment is no more relevant than when you have invested in a company and the company has declared a profit. The management of the company is however faced with the vexing question of determining whether to apply the profits towards issuing dividends to shareholders or to embark upon a stock buyback programme. Companies which retain substantial amounts of cash on their balance sheet make attractive targets for takeover, especially as they imply that the management of the company are incapable of effectively applying the retained earnings towards the generation of further profits for the company.


When a company repurchases its shares, it reduces the number of shares held by the public, thereby increasing the company’s subsequent earnings per share. This in turn increases the value of the outstanding shares. This option best obtains where the shares of the company are undervalued and shareholders are relatively unsophisticated. The repurchased shares may later be resold to new investors at a substantial profit to the company.


The repurchase programme has the added advantage of making the outstanding shares more expensive, reducing the attractiveness of the company as a takeover target. Moreover, buybacks reduce the assets on the balance sheet, thus increasing the company’s return on assets and return on equity without any substantial increase in the performance of the company. This cosmetic effect often impresses positively on the investment community, especially investment analysts and retail investors.


A further benefit of stock buybacks is the reduction of shareholder tax liability, making it a tax efficient form of earnings distribution. When a company makes a profit, it is statutorily obligated to pay Companies Income Tax on its profits before dividends are issued. Upon the issuance of dividends, the shareholder pays the government a withholding tax, meaning that the profits have been subjected to double taxation. Stock buybacks thus rewards the shareholder financially, without the tax liabilities inherent in dividend issuance.


Typically, buybacks are carried out in one of two ways:


  1. Tender Offer:


the company may present the company with an offer to submit, or tender, a portion or all of their shares within a certain time frame. The tender offer will stipulate both the company is looking to repurchase and price they are willing to pay, which is almost always at a premium to the market price of the shares. Shareholders who accept the offer will state the number of shares they intend to tender and the price which they are willing to accept. Once the company has received all the offers, it will find the right mix to buy the right mix to buy the shares at the lowest cost.


A variant of the tender offer is the fixed price tender offer. Whereby the company stipulates a price at which it is willing to repurchase the shares and gives the shareholders the option to accept the offer as stated. This is the method currently utilized by Unilever Plc in its recently concluded tender offer.


  1. Open Market Buyback:


This involves the purchase of the shares by the company on the open market in a manner similar to open market transactions commonly undertaken by any other party. It is important to note, however that the Investment and Securities Act (2012) requires companies to announce the commencement of a stock buyback scheme and the announcement of a buyback commonly results in a rise in the share price of the company.

There is no definite answer to the question as to whether stock buybacks are a beneficial option, as this depends upon the circumstances surrounding the tender offer.


Milton and Cross offers investment advisory and due diligence services to individual and corporate shareholders who require legal advice on the issuance or acceptance of tender offers and the elements of share repurchase transactions generally. We may be contacted directly on +2348036258312, or by email on :


Real Estate has steadily become a goldmine in Nigeria, especially as economic and demographic changes drive demand for commercial and residential real estate, which in turn provides opportunities for investors to reap substantial short and long term returns. The attractiveness of the real estate sector has been further enhanced by improved access to capital for eligible developers and investors

According to the PWC Emerging Trends in Real Estate Report 2014, the main drivers of Commercial and Residential real estate are Job growth, income and wage growth, interest rate reduction, inflation reduction, and favourable tax policies. Other factors that influence real estate investment are construction costs, vacancy rates, land costs, financing costs, infrastructure development costs and projected home prices.

Building a profitable real estate portfolio requires an immense degree of circumspection and diligence, especially where the investor is a newbie or insufficiently experienced in the identification and acquisition of suitable real estate assets. In order to be successful in this journey, you need to avert your mind to the following tips:


  1. Identify your target Market segment: As with any other business real estate investment requires the identification of a demographic. You need to envision the type of tenant you require for your property; for instance it would be foolhardy to develop luxury apartments or 5-Bedroom Duplexes within a low income area. If you are interested in attracting young bachelors/spinsters then it would be profitable to develop studio apartments or miniflats. On the other hand, 2-bedroom flats would appeal to newly weds and upwardly mobile singles, whilst apartments with 3 or more bedrooms are designed primarily for larger middle class families. You must think on this carefully before investing a single naira into the project, as it will affect your profit levels (and stress levels!!).
  2. Location! Location!! Location!!!: The selection of the right location could spell success or disaster for your property investment. For this purpose let us assume you have identified your target market segment, e.g. an upwardly mobile newly married couple who both work within the Lagos Island and surrounding areas. It would consequently make no sense investing in property located Epe, Ikeja, or Ojodu Berger for this purpose. The location of your property investment is thus the major driver of income.
  3. Identify expected Rental Yields: As a rule of thumb, the rental yields from a property should not be lower than the rate of inflation. For instance, if the inflation rate is 10% per annum a property worth N1,000.000 should not lease at less than N100,000 per annum. If your property consistently yields less than 10% per annum, you’re losing money due to the reduction in the time value of the money invested in the property, as well as the cost of maintaining the property, especially as the property depreciates from wear and tear arising from use. Consequently, you should seek out property in areas which historically attract significant rental yields and where rental yields still have the runway to increase. If yields consistently drop below 5% of the value of the property over an 8-10 year period, then its time to sell the asset.


  1. Follow Tastes and Trends: If you wish to avoid losing your capital investment in real estate it is essential that you are able to identify and respond to changes in the tastes of your target demographic. Once you notice that the trend has started to change on a permanent basis, it is imperative that you respond to the changes in order to ensure that you do not have an idle or inefficiently employed asset on your hands.


We hope these tips will prove useful to you as you begin to navigate the world of real estate investment



The firings of high-profile CEOs suggest that corporate boards are recognizing that imperial CEOs may not be the best CEOs. In 2005, CEO Carly Fiorina was fired by the board of Hewlett-Packard (HPQ). Hank Greenberg, was forced out at American International Group (AIG) after three decades. Perhaps the most visible case was the firing of Bob Nardelli by Home Depot (HD) following his dreadful decision to have his board of directors not attend the company’s annual meeting.

When Frank Blake became the new CEO of Home Depot he recognized the importance of moving away from the imperial leadership style of his predecessor. In addition to taking a much lower salary, Blake discontinued the catered executive luncheon that the company’s top management team had enjoyed under Bob Nardelli and “suggested” that the members of senior management eat in the cafeteria with the other employees. This sent a clear message to the employees that Blake intended to be a different kind of leader.

Perhaps the most common mistake top executives make in all types of organizations is not recognizing the importance of communicating directly and effectively with employees. One CEO who does recognize the importance of this is Jim McNerney, CEO of Boeing (BA). Boeing has a global workforce of 160,000, so communicating with everyone is not a simple task. When asked recently if he was going to spend more time with customers and stock analysts, he replied that it is more important for him to spend time with Boeing’s employees than to spend it on raising his profile and visibility in the press. According to him, employees “have got to know that working with them is more important to me than public forums where I’m making big speeches.”

In an Human Capital centric organization, the gap between leader and led should never be large. It is simply too important for leaders to gather information from others and to be seen as role models. Leaders need to be approachable. They need to be told when they do something wrong or have made a mistake, and they need to acknowledge it and change. Only if they are understood and respected by the critical capital in the organization, which is the talent that works there, will the leaders be able to create a high-performance organization.

In addition, managers need to demonstrate visibly that they value employees. When cost-cutting is a priority, they should explore alternatives before cutting staff. When it is necessary, they should be sure cuts are executed in a way that fits their employer brand. When there is leadership training, they should take part. When it is time for talent reviews, they should lead the process.

Simply put, the days of rigid business hierarchies cannot continue, and senior management need to acknowledge that a company’s human capital is its most valuable and sustainable competitive asset. As businesses make the decision to adopt an HC-centric approach, an imperialistic attitude toward leadership is not an option if they expect to thrive while attracting and retaining top talent.


The Imperial or superstar chief executive was a prominent feature of the 20th Century.These CEO’s  make decisions and develop strategies with little input and discussion. Their decisions are above criticism and challenge. They adopt lifestyles that make them celebrities, and their companies become vehicles that make them “rock stars.” They are supported by technology that is designed to keep them in touch 24/7. But in reality, most imperial CEOs are dangerously out of touch with the people they lead, particularly when it comes to the issue of strategy implementation and development.

These men  often possess highly aggressive and enterprising natures and successfully built personality cults which often transcended their companies. Men like Jack Welch of General Electric, Steve Ballmer of Microsoft, and a large number of  Nigerian bank Chief Executives.

Members of the C-suite—the CEOs, CFOs, and other chiefs—traditionally focus on managing their companies’ financial assets. But a solely financial focus can make senior staff members appear unapproachable and more consumed with dividends and returns on investment than with the development and performance of their employees. However, changes in the rules governing the accountability and liability of boards have played a major role in motivating directors to rein in their managers.

The pendulum is gently swinging in favour of a compassionate, benevolent chief executive and away from the imperial boss. This is especially true in industries that are highly regulated, such as financial, as well as in the retail and consumer sectors where likeability is vital.

Whilst the trend is toward a more emotionally intelligent leader who can understand, get, appreciate and value his or her people, yet CEOs do need to build some kind of presence because a company’s reputation is so linked to that of its leaders. while the pendulum is swinging away from the imperial leader, Experts caution that there are risks if the pendulum swings too far in the direction of the low profile leader; most notably, it could diminish and weaken the top position by making it less attractive to lure top talent.