Tender Offer

A tender offer is a structured liquidity event sponsored — or at least approved — by the private company itself. The company (or a third-party buyer, sometimes a crossover investor) sets a price and an aggregate purchase limit, then invites eligible shareholders to participate within a defined window, typically 10–20 business days.

Tenders differ from open-market secondaries because the company controls who can participate, what price is offered, and how much inventory is absorbed. For employees, it is often the primary way to access any liquidity at all. For the company, it allows some cap-table cleanup without a full IPO.

Illustrative example: a company sets a tender at $100 per share for up to $50M in total purchases. 200 employees submit shares; the company pro-rates each submission to fit within the $50M cap. An employee who submitted 10,000 shares may receive a partial fill of 6,000.

The edge the pros know: tender prices are set by the company, not the market. They may be at, above, or — importantly — below recent secondary market marks if the company wants to discourage large exits. Acceptance is voluntary, but the price is take-it-or-leave-it. Employees should compare the tender price to their 409A strike price and current secondary marks before deciding.