Share Repo Strategy

Share Repo Strategy gives an instant return to the shareholders but may harm the company’s balance sheet in long term. It will increase beta, cost of debt, worsen credit rating and have other effects, although increase pricing due to volumes and supply demand will offset this. This is the reason that despite many disadvantages, companies are preferring share Repo as compared to any other step.

If you add a debt then you have to add cash so that you can net things out, but if you add debt and you are doing Repo then you don't need to worry about cash and calculate things without worrying about the balancing.

If you take more debt than your market cap would not fall and an increase in debt without increase of cash takes up the EV. The thing that stops you to do this is D/EBITDA multiple which is used by the rating agency to rate your debt and hence calculate the cost of debt, and this would also affect your levered beta.

Although, many of these factors aren't taken into consideration.

Strategy	Multiple	Share Price	Total IRR
Excess Cash
Levered Repo
P/E threshold