Tender offer
Also: tender offer, liquidity tender, secondary tender
A company- or investor-organized offer to buy shares from existing holders at a fixed price during a defined window. For private tech employees, tender offers create a liquidity event for vested shares before IPO.
A tender offer is an invitation to existing shareholders to sell a specified number of shares at a fixed price. At private tech companies, tender offers are typically organized alongside a new financing round and run by an investment bank or the company itself. They may be limited to vested RSUs or exercised shares, held for a minimum period (often one year), and capped at a percentage of each holder’s position. Prices are usually set at a discount to the new preferred round to reflect common vs. preferred differences.
Example: a late-stage company raises a $600 million round at $40 per preferred share and runs a tender offer for common at $32. Employees with vested exercised shares held longer than a year may sell up to 25% of their position at $32. A senior engineer with 30,000 eligible shares sells 7,500 for $240,000.
Common mistake: assuming a tender counts as a change of control for acceleration. It almost never does. Unvested equity continues to vest on the existing schedule.
Tender offers matter as the primary pre-IPO liquidity path, and they trigger QSBS five-year clock decisions that should not be taken lightly.
Articles referencing Tender offer
- Company-Run Tender Offers: Mechanics, Timing, and the 20-Business-Day Rule
How company-run tender offers work from announcement to settlement, the SEC Rule 14e-1 timing requirements, and what employees need to decide in the election window.
- Estate Planning During a Tender-Offer Window: Timing and Valuation
A secondary tender offer window gives pre-IPO holders a rare liquidity event and a documented share price. Estate planning funded around a tender has specific timing and valuation advantages.
- Secondary Sales of ISO Shares: The Disqualifying-Disposition Trap
How selling ISO-exercised shares before the 2+1 holding period turns favorable long-term capital gain into ordinary income, with full tax math.
- Pre-IPO Equity: What's Actually Worth Something Before a Liquidity Event
How to think about the real value of pre-IPO options, RSUs, and common stock when there is no market price and the company might not IPO.
- Pre-IPO Share Gifting vs Selling: Tax Trade-offs for Founders
Comparing pre-IPO share gifts to family, charitable gifts, and outright sales on tax, estate, and diversification dimensions, with worked examples.