Exits & Liquidity
Tender Offer
A company-sponsored process where a company (or acquirer) offers to purchase existing shares from current shareholders at a specified price, providing liquidity before an IPO or acquisition.
A tender offer is a structured process where a company, investor, or acquirer makes an offer to purchase existing shares from a company's shareholders at a specified price within a specified time window. In private company contexts, tender offers are often used by late-stage startups to provide liquidity to employees and early investors without going through a full IPO or acquisition.
Common structures include company-sponsored tenders (the company itself buys back shares from employees and investors), investor-led tenders (a new investor offers to buy existing shares alongside a primary investment), and acquisition tenders (an acquirer directly offers to buy shares from all shareholders).
Because tender offers must comply with SEC regulations when certain thresholds are met, they require careful legal structuring. They're one of the most common ways high-value private companies provide pre-IPO liquidity.
In Practice
Stripe runs a $1B tender offer, allowing employees and early investors to sell up to 20% of their holdings at the current $95 per share valuation. The tender is oversubscribed — more shareholders want to sell than the offer can accommodate — so the company applies a pro-rata cap on each seller.
Why It Matters
For employees at late-stage startups, a tender offer can be transformative — the difference between waiting years for an IPO and getting real money now. For companies, tender offers improve retention by reducing employee anxiety about illiquid equity. Understanding who controls whether and when a tender offer happens is important for evaluating startup equity compensation.