Employee tender (employee tender offer) is a controlled secondary sale letting eligible employees sell a portion of vested equity to buyers—often existing VCs, specialized secondaries funds, or the company itself.

How it works

The board approves a tender at a set price per share (usually at or below latest 409A or round price, sometimes at a premium in hot companies). Employees opt in within a window; buyers aggregate purchased shares. Company and major investors may cap total size and individual sell limits (e.g., 20% of vested holdings).

Tenders differ from ad-hoc secondary transactions where one employee finds one buyer—tenders are company-facilitated, with standardized docs and tax reporting.

Example: a late-stage startup at $2B valuation runs a $50M tender at $15/share. Employees sell to a consortium of existing investors; founders may participate if allowed; new money does not go to company balance sheet—it goes to selling shareholders.

Why it matters

• Founders: Tenders aid retention and morale but signal cap table complexity. Coordinate messaging so tender price does not conflict with next primary round pricing.
• Investors: Buyers may increase ownership without primary issuance; sellers reduce concentration. Lead investors often set tender terms and ROFR processes.
• Employees: Liquidity is partial and optional—understand tax withholding, disqualifying dispositions for ISOs, and whether you should hold for a larger exit.

Common mistake

Assuming every private company will run tenders. Many never do—liquidity remains locked until acquisition or IPO unless board proactively organizes an event.

Related ideas

• Secondary sale — broader category of private share sales
• 409A — valuation context for tender pricing
• Employee Ownership — why tenders matter culturally
• ROFR — right of first refusal on transfers