A buyback occurs when a company repurchases its own shares from the marketplace. Companies may decide on a stock buyback if they feel their shares are undervalued. A stock buyback can also occur when companies have surplus cash on their balance sheets. Stock buybacks may be executed in the open market at prevailing prices. If the stock buyback intends to acquire a large percentage of the available shares, it may be done as a tender offer with shareholders receiving a premium over the market price. By repurchasing all outstanding shares, a stock buyback can be used to turn a public company into a private one.