Tender Offers Explained: How They Work, Types, Pricing & Regulations

An offer to buy shares from current shareholders at a set price within a certain time is called a tender offer. For private companies, tender offers let employees and early investors sell shares without needing an IPO or sale of the company.

Tender offers are important for providing liquidity in private markets and for public-company acquisitions. PitchBook reports that 12 startups had tender offers totaling about $15.9 billion in the year ending Q2 2026. In public markets, Paul Weiss notes that tender offers made up 16% of U.S. public mergers worth $100 million or more in 2025.

This guide covers what tender offers are, the different types, how pricing works, the rules and taxes involved, and what companies and shareholders should think about before starting a tender offer.

Key Takeaways

• Private companies can provide shareholder liquidity without an IPO or acquisition, allowing eligible employees and early investors to sell shares.
• Tender offer prices vary by deal. For private companies, prices might be compared to 409A valuations, funding rounds, or past secondary sales. For public companies, prices are often compared to the market price before the offer.
• Companies must consider shareholder rights, corporate approvals, applicable regulations, and potential compensation expenses.
• Certain qualifying tender offers can use a shorter offering period. An April 2026 SEC exemptive order permits a minimum period of 10 business days instead of the standard 20.

What Is a Tender Offer?

A tender offer is an offer to buy shares from shareholders at a fixed price within a fixed period. Shareholders can choose whether to participate, subject to the offer’s terms.

There are three common types:

• Issuer tender offer: A company offers to repurchase its own shares.
• Third-party tender offer: An outside investor or acquiring company offers to purchase shares from existing shareholders.
• Mini-tender offer: An offer to buy 5% or less of a company’s shares, set up to avoid some federal rules that apply to bigger public-company tender offers.

A company-sponsored tender offer doesn’t always mean the company is buying its own shares. Sometimes, a private company arranges for outside investors to buy shares from eligible shareholders.

How Does a Tender Offer Work?

A tender offer follows a structured process, from setting the purchase terms to collecting shareholder responses and completing share transfers.

For private companies, the process commonly involves six steps:

• Describe the offer – Establish the purchase price, eligible shareholders, number of shares offered for sale, and transaction timeline.
• Review approvals and shareholder rights – Obtain required corporate approvals and address transfer restrictions, rights of first refusal (ROFR), and other contractual obligations.
• Distribute offer documents – Provide eligible shareholders with the terms, participation instructions, deadlines, and relevant disclosures.
• Collect shareholder elections – Shareholders decide whether to participate and how many eligible shares to tender.
• Apply allocation rules – If the offer is oversubscribed, use the disclosed proration or allocation rules to determine how many shares will be purchased.
• Complete settlement – Coordinate payments and share transfers, then update the company’s cap table and ownership records.

The specific requirements depend on whether the buyer is the company itself or a third party, as well as the applicable securities regulations and shareholder agreements.

Advantages and Disadvantages of Tender Offers

Tender offers can benefit shareholders and companies, but they also introduce risks and administrative responsibilities.

Advantages

• Shareholder liquidity – Employees, founders, and investors can sell eligible shares without waiting for an IPO or acquisition.
• Control over liquidity events – Private companies can define eligible participants, share limits, and transaction timelines.
• Portfolio diversification – Shareholders can reduce their exposure to a single company’s equity.
• Structured execution – Defined terms and rules help coordinate share sales and ownership changes.

Disadvantages and Risks

• Uncertainty – The offer price may differ from the value shareholders could receive in a future transaction.
• Participation – Eligibility conditions may prevent shareholders from selling all their shares.
• Tax and accounting  – Transactions may have capital gains, ordinary income, or compensation-related accounting implications.
• Legal complexity – Companies must manage securities regulations, approvals, transfer restrictions, and settlement.

Tender Offers in Private Companies

Unlike publicly traded shares, private-company shares cannot generally be sold freely on a stock exchange. This can make it difficult for employees, founders, and early investors to access the value of their equity before an IPO or acquisition.

Tender offers present structured liquidity while the company remains private. They are relevant for later-stage startups whose employees and investors may have held shares for several years.

Private-Company Tender Offer Market Trends

According to PitchBook, the estimated midpoint of direct secondary transaction volume in U.S. venture-backed companies increased from $91.7 billion in the 12 months ending Q4 2025 to $107.1 billion in the 12 months ending Q2 2026.

Period	Estimated direct secondary volume (midpoint, range)	Startups announcing tender offers	Announced tender offer value
12 months to Q4 2025	91.7B(62.5B–$120.9B)	14	About $11.3B
12 months to Q2 2026	107.1B(90.3B–$123.9B)	12	About $15.9B

Sources: PitchBook 2025 Annual US VC Secondary Market Watch and Q2 2026 US VC Secondary Market Watch. Direct secondary volume estimates cover the wider secondary market, not tender offers alone.

Tender offer activity was highly concentrated. OpenAI ($6.6 billion), Anthropic ($5.5 billion), and SpaceX ($2.6 billion) accounted for about $14.7 billion of the $15.9 billion in announced tender offers during the 12 months ending Q2 2026, or roughly 92% of the total. The other nine announced tender offers ranged from $100 million to $300 million each.

What Private Companies Need to Get Right

Before launching a tender offer, private companies need to address three important areas:

• Corporate approvals and funding – Obtain necessary approvals and confirm that the transaction complies with applicable corporate law. Delaware corporations, for example, face restrictions on share repurchases that would impair capital.
• Shareholder and transfer rights – Review agreements, ROFR provisions, co-sale rights, and other restrictions that may require consent.
• Pricing and valuation – Evaluate the offer price against relevant valuation benchmarks and consider whether the transaction could create compensation-related accounting implications.

How Is a Tender Offer Price Determined?

A tender offer price is how much a buyer is willing to pay for each share. For public companies, this price is often higher than the current market price to encourage people to sell. For private companies, setting a fair price means looking at company valuations, recent deals, and market trends.

Choosing the Right Reference Price

Company type	Common reference prices
Private company	The latest 409A fair market value of common stock, the last preferred round price, and the price from the previous tender offer.
Public company	The unaffected closing price (before any deal leak or announcement), the 30-day volume-weighted average price (VWAP), and the 52-week high.

A 409A valuation estimates the FMV of common stock, while a preferred funding round price reflects the price paid for shares that may carry additional economic rights.

A previous tender offer provides a transaction-based reference, but changes in company performance and economic conditions may affect its relevance.

For private companies, Eqvista Real-Time Company Valuation® serves as a pricing layer for company-sponsored tender offers, providing continually updated valuation insights based on performance and economic conditions that help inform offer pricing, while the final transaction price depends on the agreed terms and framework.

How to Calculate a Tender Offer Premium

A tender offer premium estimates the difference between the offer price and a selected reference price.

Tender Offer Premium (%) = [(Offer Price − Reference Price) / Reference Price] × 100

For example, a $12 offer compared with an $8 reference price represents a 50% premium. The same $12 offer evaluated with a $15 preferred round price represents a 20% discount.

Offer	Offer price	Reference price	Dollar premium	Percentage premium
Illustrative private tender vs. 409A value	$12.00	$8.00 (409A)	$4.00	50.00%
Same tender vs. last preferred round	$12.00	$15.00 (round)	−$3.00	−20.0%
SpaceX, December 2025 vs. July 2025 tender	$421.00	$212.00 (prior tender)	$209.00	98.60%
Genmab for Merus vs. Sept 26, 2025 close	$97.00	$68.89 (close)	$28.11	40.80%
Genmab for Merus vs. 30-day VWAP	$97.00	$67.42 (VWAP)	$29.58	43.90%

Source: Fortune (SpaceX) and Genmab’s SEC filing (Merus). Premiums are calculated from the reported prices. The first two examples are illustrative.

A higher premium does not necessarily mean a better offer. Shareholders should also consider the rights attached to their shares, transaction conditions, taxes, and potential future liquidity.

Tender Offer Examples

Real-world transactions show how tender offers can provide liquidity and support public-company acquisitions.

SpaceX: Employee and Shareholder Liquidity

In December 2025, SpaceX arranged a secondary share sale at $421 per share, nearly double the $212 price from its July 2025 tender offer. The transaction implied a valuation of around $800 billion, compared with around $400 billion five months earlier.

SpaceX shows how a large private company can give shareholder liquidity without an IPO.

Source: Fortune.

Genmab and Merus: Tender Offer as an Acquisition Strategy

In October 2025, Genmab offered to acquire Merus for $97 per share in cash, valuing the transaction at approximately $8 billion.

The offer shows around 41% premium to Merus’ unaffected closing share price. It included a minimum acceptance condition initially set at 80% of share capital, with a possible reduction to 75% under certain circumstances.

Source: Genmab’s SEC filing.

Jazz Pharmaceuticals and Chimerix: Acquisition at a Premium

In March 2025, Jazz Pharmaceuticals announced an offer to acquire Chimerix for $8.55 per share in cash, representing an approximately 72% premium to its March 4 closing share price.

The transaction required a majority of Chimerix’s outstanding voting shares to be tendered, demonstrating how minimum acceptance conditions affect whether an acquisition proceeds.

Source: Jazz Pharmaceuticals’ SEC filing.

Public-Company Tender Offer Trends

Tender offers remain an established acquisition structure in public markets, although their use varies from year to year.

According to Paul Weiss’s 2025 Year-End M&A Roundup, tender offers accounted for 16% of U.S. public mergers valued at $100 million or more in 2025, compared with 10.6% in 2024.

Year	Tender offers as % of U.S. public mergers	Average unaffected premium
2023	16.40%	48.90%
2024	10.60%	38.30%
2025	16.00%	48.60%

Source: Paul Weiss 2025 Year-End M&A Roundup, citing Deal Point Data.

When a Tender Offer Premium Can Be Misleading

A high premium does not automatically mean favorable terms for shareholders. Important considerations include:

• A depressed reference price: A premium to a recently declining share price may still be below the company’s earlier trading value.
• Proration: Shareholders may sell fewer shares than expected if the offer is oversubscribed.
• Mini-tender offers: These may be priced below market value or include unfavorable conditions. The SEC advises investors to review their terms carefully.

How Long Do Tender Offers Take?

Under U.S. securities regulations, tender offers generally must remain open for at least 20 business days. However, an SEC exemptive order issued on April 16, 2026 allows certain qualifying tender offers to use a minimum initial offering period of 10 business days.

Requirement	Standard rule	Qualifying offer under the April 2026 order
Minimum initial offer period	20 business days	10 business days
Notice of changes to price or percentage of shares sought	Generally 10 business days before expiration	5 business days before expiry (accepting up to 2% more shares is not a change)
Notice of other material changes	Generally 5 business days before expiration	2 business days before expiry

Sources: SEC Exemptive Order, April 16, 2026. Standard material-change periods reflect SEC guidance and established practice.

Which Tender Offers Qualify for the 10-Business-Day Period?

The shortened period applies to specific transactions meeting the SEC’s requirements, including:

• Qualifying private-company issuer tender offers: Cash offers at a fixed price made by eligible non-reporting issuers or their wholly owned subsidiaries.
• Certain public-company acquisition offers: Negotiated, all-cash offers meeting applicable filing and disclosure requirements.
• Certain public-company issuer tender offers: Qualifying partial issuer self-tenders.

The exemption does not protect third-party tender offers or other transactions, including going-private offers.

10 business days is a minimum period, not a guaranteed completion time. Preparation, approvals, shareholder participation, and settlement can extend the overall process.

The SEC order has no specified expiration date but may be modified or withdrawn. Applicable anti-fraud protections remain in effect.

Tender Offer Regulations in the US

U.S. tender offers are regulated primarily under the Securities Exchange Act of 1934, as amended by the Williams Act of 1968. Applicable requirements depend on whether the company is public or private and who is purchasing the shares.

Do Tender Offer Regulations Apply to Private Companies?

Yes. Private-company tender offers are generally subject to Section 14(e) and Regulation 14E, even when the company’s shares are not publicly traded.

However, not all public-company tender offer requirements apply to private companies:

• Regulation 14D – Governs qualifying third-party tender offers involving registered equity securities.
• Rule 13e-4 – Applies to issuer tender offers involving certain registered or reporting companies. Most non-reporting private companies are outside its scope.
• Regulation 14E – Shows baseline tender offer protections that apply to public and private dealings.

Key SEC Rules Governing Tender Offers

Rule	Main requirement
Rule 14e-1	Minimum offering periods, changes to offer terms, and prompt payment or return of tendered securities
Rule 14e-2	Target-company response to certain third-party tender offers
Rule 14e-3	Restrictions on trading involving certain material nonpublic information
Rule 14e-5	Restrictions on certain securities purchases outside the tender offer
Rule 14e-8	Prohibition of fraudulent tender offer announcements

Private companies must also consider applicable state corporate laws, shareholder agreements, and transfer restrictions. The specific requirements depend on the transaction structure.

Tax and Accounting Implications of Tender Offers

Tender offers can create different tax effects for shareholders and accounting duties for companies when employees sell equity gained through compensation plans.

How Are Tender Offers Taxed?

U.S. federal tax treatment depends on the type of equity, acquisition method, cost basis, holding period, and transaction structure.

• Shares already owned – A sale generally produces a capital gain or loss based on the difference between sale proceeds and adjusted tax basis, subject to applicable exceptions.
• Nonstatutory stock options (NSOs) – Exercise generally creates ordinary income equal to the spread between fair market value and exercise price. A subsequent share sale generally creates a capital gain or loss.
• Incentive stock options (ISOs) – Exercise generally does not trigger regular federal income tax, although AMT may apply. Favorable treatment generally requires holding shares for more than two years after grant and more than one year after exercise.
• Compensatory transactions – Amounts treated as compensation rather than investment proceeds may be subject to ordinary income tax and applicable payroll withholding.

When Can a Tender Offer Create Compensation Expense?

Under ASC 718, a private-company tender offer may create additional compensation expense if employees or former employees sell shares above their applicable fair value and the excess is determined to be compensatory.

Consider this illustrative transaction:

Item	Amount
Tender offer price	$12.00 per share
Assumed fair value	$8.00 per share
Difference	$4.00 per share
Shares sold	10,000
Potential compensation expense	$40,000

The $40,000 difference could represent compensation expense if the transaction is determined to be compensatory. A tender price exceeding a recent 409A valuation does not automatically create an expense.

The accounting assessment depends on factors such as the buyer’s relationship to the company, the company’s involvement, and whether the premium reflects compensation for services or other economic considerations.

Companies and shareholders should consult qualified tax and accounting advisors before proceeding.

How to Decide Whether to Participate in a Tender Offer

• Review documents – Check the price, deadlines, eligibility, exit rights, and closing conditions.
• Compare valuations – Look at 409A values, recent funding rounds, past secondary sales, or unaffected public market prices, if relevant.
• Check limitations – Understand whether proration or other allocation rules could reduce the number of shares sold.
• Estimate after-tax proceeds – Think about cost basis, how long you held shares, option rules, and possible compensation income.
• Evaluate future liquidity – Weigh the benefit of getting cash now against keeping shares for a future sale.
• Consider personal financial goals – Think about your need for cash, desire to spread risk, and willingness to keep owning part of the company.

The right decision depends on the offer terms and the shareholder’s situation.

Frequently Asked Questions About Tender Offers

Planning a Tender Offer for Your Company?

Eqvista helps private companies manage company-sponsored tender offers, including shareholder participation, allocation rules, approvals, and cap table updates. Eqvista Real-Time Company Valuation® provides the pricing layer, helping companies evaluate offer prices against current valuations and market conditions.

With tender offer management, valuation, and equity management connected in one platform, companies can manage the liquidity process from pricing through settlement. Explore Eqvista Tender Offer Services.