VC & PE Glossary
What Is Tender Offer Program?
Updated
Definition
A tender offer program is the company's recurring policy and process for running tender offers — eligibility rules, frequency, pricing methodology, and governance — not a one-off transaction.
Useful for: Founders, Investors
A tender offer program is the documented framework a private company uses to run periodic tender offers for shareholders.
How it works
Programs typically define: minimum company performance or valuation triggers, eligible share classes (common vs preferred), employee tenure or vesting requirements, maximum sell percentage per holder, and whether tenders coincide with primary financings. The board and major investors approve each execution even when a program exists.
Companies like late-stage unicorns publicize programs to compete for talent against public employers with liquid stock. Counsel drafts program documents alongside liquidity program communications. Pricing often references the latest 409A or round price, sometimes with a modest discount for common sellers.
Frequency varies — annual or every 18–24 months — depending on growth capital needs and investor appetite to buy secondaries.
Why it matters
- Founders: A clear program reduces ad hoc negotiation every time someone wants liquidity. It also sets expectations that not everyone sells every round.
- Investors: Program terms may include ROFR, pro rata participation for leads, and caps on common secondary volume to limit cap table messiness.
Common mistake
Promising “regular liquidity” in recruiting without board-approved program capacity. One canceled tender damages trust more than never offering one.
Related ideas
See also tender offer, tender offer exit, liquidity program, and 409A valuation.
Related terms
- Liquidity Program — A liquidity program is a company- or sponsor-organized process that lets selected shareholders sell shares — often tender offers or coordinated secondaries — while the company stays private.
- Tender Offer — A tender offer is a structured program where a company or approved buyer purchases shares from existing shareholders — often employees and early investors — at a set price during a limited window.
Common questions
Short answers for founders, LPs, and operators