What is Tender Offer?
A company-run program letting many shareholders sell shares at a set price in one organized event.
Tender Offer: definition
Rather than negotiating one-off secondary sales, a company can run a tender offer to give many shareholders liquidity at once. A buyer - the company itself, an existing investor, or a new one - offers a fixed price per share for a set period, and eligible holders choose how many shares to tender. Tender offers are common at later-stage private companies as a way to reward employees and provide liquidity while staying private, and they involve legal and tax structuring.
- A set price offered to many shareholders during a fixed window
- Buyer may be the company, an existing investor, or a new one
- Employees choose how many eligible shares to tender
- Provides organized liquidity without an IPO or acquisition
How Fintra handles it
Fintra equity management provides the accurate cap-table and vesting data a tender offer depends on - who holds what, how much is vested, and eligibility - and reflects the resulting transfers once the offer completes. Any cap-table change is recorded with an audit trail and reviewed by a named human, while the legal and tax structuring is handled with your advisors.
- Accurate holdings, vesting, and eligibility data for the offer
- Resulting share transfers reflected on the cap table
- Audit trail on every ownership change, with human review
Worked example
Frequently asked questions
What is the difference between a tender offer and a secondary sale?
A secondary sale is typically a one-off transaction between a single seller and buyer. A tender offer is a structured, company-organized program that offers many shareholders the chance to sell at a set price during a defined window. A tender offer is essentially secondaries at scale.
Why do private companies run tender offers?
To give employees and early investors liquidity without going public or being acquired, which helps with retention and morale during long private-company timelines. Structuring it as a tender offer standardizes the price and process rather than handling many individual sales.
Who buys the shares in a tender offer?
The buyer can be the company itself (a buyback), an existing investor increasing their stake, or a new investor. Sometimes a tender offer runs alongside a primary fundraising round, with the new investor purchasing both new and existing shares.
Are employees required to sell in a tender offer?
No - participation is voluntary. Eligible shareholders decide whether and how many of their eligible shares to tender, often subject to a cap on the percentage they can sell. Those who prefer to hold can simply decline to participate.
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