You just got the notice. Your company is running a tender offer — a program that lets employees sell some of their shares for cash while the company is still private — and there's a closing date. Now you're stuck on one question. How much should you sell? The instinct most people feel is to treat this as a simple yes-or-no bet on whether the company still has room to run. In reality, it’s much more nuanced than that.
Should I sell shares in a company tender offer or secondary liquidity program?
Sometimes, yes — but the right amount to sell is a planning decision that depends on your entire financial picture, not a referendum on the company's future. This is one of the few chances to turn paper wealth into cash you actually control, and the window is fixed.
What a tender offer is really telling you
Start with what the offer signals. Companies usually run these programs because pressure has built up. Employees have waited years, watched their net worth grow on paper, and have had no way to sell a single share. A tender offer relieves that pressure so the company can stay private longer without losing current employees, while continuing to attract new ones.
Read that carefully. A tender offer is a sign that a near-term exit is not coming. The company and its investors set every term — who can sell, how much, and at what price. That price is almost always a discount to the most recent funding-round valuation (the price outside investors paid the last time the company raised money). The structure favors the company, which usually raises capital at one price and buys back employee shares at a slight discount.
That does not make it a bad deal for you. It is real liquidity you cannot get anywhere else, and turning it down does not produce a better offer somewhere else. But these programs cap how much you can sell — often something like 20% of your owned shares (but not unexercised options). And if too many people want to sell, the offer is oversubscribed, meaning demand exceeds what the buyer will take. When that happens, participation is pro-rated, so you may be approved for even less than the cap. Plan around selling a modest slice, and a portion of what you requested. Not around getting everything you request.
The real question is how participation may change (or not) your household financial situation
Now reframe the whole decision. The amounts most people can pull out of a tender are meaningful — enough to matter and to warrant real thought — but rarely large enough to transform your finances. So the useful question is not whether you believe in the company. It is how much single-company risk you want your household to carry into whatever comes next.
Converting even a modest fraction of illiquid, private company stock into cash you actually control has value — especially when the alternative is waiting years for an exit the tender itself suggests is not close. Participating partially is not a vote against the company. It is taking some certainty today while the bulk of your net worth still rides on one outcome you do not control.
Pro-Tip: The most useful question is not whether to participate — it is how participation would change your current financial situation. Selling enough to meaningfully strengthen your finances while keeping upside on the table can be attractive. The right amount — which may be none — depends on your full household picture and the specifics of your company's offer, which is exactly the kind of decision worth bringing to a professional.
If you'd like to explore whether ongoing financial planning and investment management make sense for your situation, you can schedule an intro call here:
Common Questions
How are sale proceeds from a pre-IPO tender offer taxed?
It depends on the shares you sell. Shares held long enough to qualify for long-term capital gains are taxed at more favorable rates than shares sold shortly after exercise or vesting, where the gain would be treated as ordinary income. Because the program may let you choose which lots to sell, that choice directly affects your result — and selling shares that are close to qualifying but not quite there can cost more than it should.
What happens if a tender offer is oversubscribed?
Oversubscribed means employees want to sell more shares than the buyer is willing to purchase. When that happens, participation is usually pro-rated, so you may be approved to sell less than the stated limit — sometimes noticeably less. That's why it makes sense to plan around a partial fill rather than assuming you'll get the full amount you request.
Does participating in a tender offer affect my remaining equity or vesting schedule?
Selling owned shares in a tender offer does not affect your remaining equity or your vesting schedule. The tender offer governs what you can sell and any conditions attached.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech leaders, business owners, physicians, and those seeking financial planning services.