What are the potential tax implications for shareholders participating in the buyback, and how might this influence investor demand?

Tax considerations

When a shareholder sells shares back to Intapp under the $150 million repurchase, the transaction is treated as a sale of stock, not a dividend. The proceeds therefore generate a capital‑gain or loss that is taxed at the holder’s applicable rate:

• Long‑term gains (shares held > 12 months) are taxed at the federal long‑term capital‑gain rate (0 % – 20 % depending on income) plus any state tax.
  
• Short‑term gains (shares held ≤ 12 months) are taxed at the ordinary‑income marginal rate, which can be substantially higher for high‑income investors.
  
• The sale is a discrete taxable event; there is no “qualified‑dividend” treatment, so the 28 % dividend‑tax rate does not apply.
  
• Investors must also watch the wash‑sale rule if they repurchase the same ticker within 30 days, which could defer the loss deduction.

Because the buyback is a market‑based redemption, the tax impact is the same as any open‑market sale, but the after‑tax return can differ markedly across investor tax brackets. High‑tax‑rate shareholders may be more reluctant to participate, while those in low‑tax brackets (or those holding shares in tax‑advantaged accounts) are likely to view the repurchase as a clean, tax‑efficient way to realize value.

Effect on investor demand

The tax profile will shape the composition of demand:

• Broad‑based demand is still expected to be strong because the program signals management’s confidence in the balance sheet and provides a floor for the stock price. The open‑market repurchase side will act as a price‑support catalyst, especially if the market perceives the $150 million as a commitment to return cash to shareholders.
• Demand may be muted among high‑tax‑rate owners who could defer selling until a more tax‑efficient window (e.g., year‑end or after a capital‑loss harvest). This can create a layered supply curve—initially modest sell‑side pressure, followed by a secondary wave of sellers once the tax timing aligns.
• From a technical standpoint, the buyback can create a short‑term bullish bias: the daily volume and price may hold above recent resistance (around the $X‑level) as the repurchase engine absorbs float. Traders should watch for tighting of the bid‑ask spread and a rise in the 20‑day moving average as the program progresses.

Actionable take‑aways

1. Position for upside if you are in a low‑tax bracket or can hold the shares in a tax‑advantaged account—anticipate price support and a modest rally as the repurchase proceeds.
   
2. Consider a staggered sell if you are a high‑tax‑rate holder: capture short‑term gains now, then re‑enter after the program winds down or after a capital‑loss harvest to improve the after‑tax return.
   
3. Monitor execution cues (e.g., large open‑market purchases, 8‑K filings on repurchase milestones) for timing entries; a sudden uptick in volume can signal the next wave of demand and provide a short‑term entry point on pull‑backs to the 20‑day moving average.