Secondary Tender Offer
Definition
A company-approved liquidity process in which eligible holders are invited to sell private-company shares to the company, existing investors, new investors, or a designated buyer at specified terms. Tender offers are one of the cleaner ways private companies provide controlled liquidity before IPO.
Why it matters
Tender offers reduce some transfer uncertainty because the issuer controls the process, but they are selective. Eligibility, allocation caps, pricing, disclosure, and timing are set by the company and participating buyers, not by a continuous public market.
Common misconceptions
- •A tender offer is not open-ended liquidity; it is a window with rules and caps.
- •The tender price may not equal the last preferred round valuation or employee option value.
- •Participation can be limited by employment status, share class, tenure, tax rules, or company discretion.
Technical details
Typical terms
Tender materials usually specify eligible sellers, maximum shares accepted, purchase price, proration rules, required representations, tax treatment, settlement timing, and whether the buyer is the company or a third party.