Many founders use "reinvesting profits" as an excuse to avoid scrutinizing their P&L. Without rigorous tracking, this becomes a blank check to roll money back into the business without measuring ROI. Profitable companies should actively take profits and be intentional about how and where capital is reinvested.

After a large, debt-funded acquisition, deleveraging should be the top priority over share buybacks. Choosing buybacks sends a mixed signal, disappoints investors expecting a return to the growth playbook, and leaves the company too financially constrained to pursue future strategic M&A opportunities.

Roepers advises CEOs of undervalued companies to stop making investors guess their strategy. Instead of a vague "treasure hunt," they should host a capital markets day presenting a credible, multi-year roadmap to a specific earnings per share (EPS) target, which incorporates both P&L improvements and balance sheet actions.

Since the 1990s, U.S. companies have returned more capital through stock buybacks than dividends. An investor focused solely on dividend yield is missing the larger part of the shareholder return story and cannot accurately assess a company's total capital allocation strategy.

The ultimate differentiator for CEOs over decades isn't just product, but their skill as a capital allocator. Once a company generates cash, the CEO's job shifts to investing it wisely through M&A, R&D, and buybacks, a skill few are trained for but the best master.

CEOs are typically promoted for operational prowess or political skill, not capital allocation ability. They are then tasked with making major investment decisions for which their entire career has left them unprepared.

The tendency to waste capital is not tied to a specific growth stage but rather to the leadership team's discipline. The more money a company raises, the more it will spend, often inefficiently. Raising only what is truly needed is a hallmark of strong capital allocation.

Companies termed "share cannibals" aggressively repurchase their own shares, especially when undervalued. This capital allocation strategy is often superior to dividends because it transfers value from sellers to long-term shareholders and acts as a high-return, low-risk investment in the company's own business.

Prioritize decisions that increase your business's sellable value (enterprise value) over just maximizing short-term profits. This involves strategically reinvesting profits to de-risk the business and build durable, long-term revenue streams, creating a more valuable asset.