(a) The advantages of a buy-out may be viewed from the perspectives of each of the parties involved.
The selling company may regard a buy-out as preferable to the liquidation of a loss making division. A buy-out might result in a higher disposal price, and has the social effect of protecting jobs. Selling part of the organisation might allow the company to focus on its core competence.
The current managers, with their existing expertise of the markets, relationships with clients etc may have a better chance of successfully operating the company. They are also likely to be highly motivated through their significant equity holdings, and by the potential for large capital gains if the company succeeds.
A venture capitalist or other type of investor normally takes a high risk, in the hope of high returns mainly through capital gains. Most investors would seek some form of exit route for their investment after several years, possible through a listing on the AIM or other relevant market. In some countries investing in buy-outs may offer tax advantages.

(b) Share repurchases and share splits

Share repurchases
Share repurchases are a way for companies to distribute earnings to shareholders other than by a cash dividend. They are also a means of altering a target capital structure; supporting the share price during periods of weakness; and deterring unwelcome take-over bids. Companies typically repurchase shares either by making a tender offer for a block of shares, or by buying the shares in the open market. In the absence of taxation and transactions costs share repurchase and the payment of dividends should have the same effect on share value. However, the different treatment of taxation on dividends and capital gains in many countries may lead to a preference for share repurchases by investors.
If the repurchase of shares is by means of a tender offer, this will often be at a price in excess of the current market value, and may have a different effect on overall company value.
An important question for share value is what information a share repurchase conveys to the market about the company and its futures prospects.
Managers should take decisions that maximise the intrinsic value of the firm. This, in theory, involves undertaking the optimum amount of positive NPV investments. The use of share repurchases, and the payment of dividends, will therefore be influenced by the amount of investment that the company undertakes. When a company does not have sufficient investments to fully utilise available cash flow, the payment of dividends or share repurchases are more likely.
Analysts are believed to normally consider an increase in dividends or share repurchases as good news, as they suggest that the company has more cash, and possibly greater earnings potential, than previously believed. However, if this subsequently proves not to be so, share prices will adjust downwards.
Share repurchases in themselves do not create value for the company, but the market may see the information or signals that they provide as significant new information that will affect the share price.

Share splits
Share splits are the issue of additional shares at no cost to existing shareholders in proportion to their current holdings, but with lower par value. Share splits have no effect on corporate cash flows and, in theory, should not affect the value of the company. The share price, in theory, should reduce proportionately to the number of new shares that are issued.
Motives for share splits include:
(i) A company wishes to keep its share price within a given trading range, e.g. below GH¢500 per share. It is sometimes argued that investors might be deterred by a high share price, and that lower share prices would ensure a broader spread of share ownership. Shareholders could actually lose from lower prices, as the bid-offer spread (the difference between buying and selling prices) is often higher as a percentage of share price for lower priced shares.
(ii) Companies hope that the market will regard a share split as good news, and that the share price will increase (relative to the expected price) as a result of the announcement. Evidence suggests that even if such reaction occurs it is short-lived unless the company improves cash flows, increases dividends etc. in subsequent periods.