Private companies are staying private longer than ever, which means employees and early investors often wait years before an IPO or acquisition, or in other words, an opportunity to receive cash in exchange for their equity. That’s where company-led tender offers come in. Unlike ad hoc secondary sales, which are often blocked, tenders are organized by the company itself, creating a structured way for employee shareholders to sell equity and for new or existing investors to buy in.
In some cases, the company executes a tender in the form of a buyback, repurchasing shares from employees using its own capital. In other cases, new or existing investors are brought in to purchase shares, either by the company itself or through a buyside auction.
Company-led tenders can benefit everyone at the table: employees, issuers, and investors. Here’s how:
For Employees, Tenders Provide Access to Sell Shares and Reason to Stay Motivated
One of the biggest challenges of working at a private company is being “equity rich but cash poor.” Company-led tenders give employees a chance to unlock some of the value in their equity before an IPO or liquidity event.
Key Benefits:
- Liquidity Without Quitting: Employees don’t have to leave the company in search of cash compensation elsewhere.
- Financial Flexibility: Proceeds can help fund major life events like buying a home, paying off student loans, raising a family or building an emergency fund.
- Fair Process: Because tenders are organized by the company, pricing, eligibility, and limits are consistent across participants, reducing uncertainty and guesswork.
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For Issuers (Companies): A Tool for Retention and Control
From the company’s perspective, a well-run tender offer is about more than liquidity – it’s a strategic tool.
Key Benefits:
- Employee Retention: By offering partial liquidity, companies give employees a reason to stay engaged, rather than leaving to seek cash compensation elsewhere.
- Employee Attraction: As companies stay private longer, prospective employees are increasingly looking at tender offers as a key benefit.
- Cap Table Management: Centralized tenders allow the company to control who owns shares and offer an opportunity to clean up cap tables prior to an IPO or acquisition.
- Governance & Compliance: A company-led process reduces the risk of unapproved transfers, messy shareholder structures, or compliance issues under securities law.
- Culture & Morale: When employees see their equity delivering real financial value, it strengthens their connection to the company’s mission.
For Investors: Structured Access to High-Growth Companies
Both existing and new investors also benefit from company-led tenders.
Key Benefits:
- Access to Shares: Tenders often provide rare opportunities to buy equity in private companies that aren’t available in the public markets.
- Controlled Process: Because the company manages the tender, investors gain confidence in the accuracy of information and the stability of the transaction.
- Alignment of Interests: Tender participation strengthens new or existing investors’ relationships with the company and its management team, creating long-term alignment.
Why Company-Led Tenders Are Advantageous to All Parties
- Structure & consistency: Streamlined process, same terms for all participants.
- Transparency: Pricing is defined, not negotiated in the shadows.
- Efficiency: Institutional execution reduces legal and administrative burdens for all sides.
- Trust: With the company involved, employees and investors alike know the process is above-board
As private companies continue to stay private longer, company-led tenders are emerging as one of the most important tools for balancing growth with liquidity. Increasingly, it’s often not a question of if, but when companies will offer them. Done right, they are a part of a company’s ensure that employees, issuers, and investors all benefit. Employees gain access to meaningful liquidity. Issuers strengthen talent attraction and retention, culture, and cap tables. Investors gain structured access to investment opportunities that may not otherwise have been available.
