Tender Offer
A company-organized opportunity for employees to sell some of their vested shares to a buyer.
Definition
A tender offer is a structured, company-approved process where employees and other shareholders can sell some or all of their vested shares to a specific buyer (often a late-stage investor, private equity firm, or the company itself). Tender offers are typically offered at late-stage private companies as a way to provide partial liquidity before an IPO. The company sets the price, timeline, and the maximum amount each person can sell.
Why it matters
Tender offers are one of the few ways to get cash for your startup equity before an IPO. They let you take some money off the table while keeping your remaining shares for further upside. However, the price may be below the latest round's PPS.
Example
A Series D company offers a tender at $40/share (the latest round price was $45). Employees can sell up to 25% of their vested shares. An employee with 20,000 vested shares (5,000 eligible) sells and receives $200K before taxes.