Liquidity Without a Sale: What a Tender Offer Does to Your Valuation

More private companies are buying back shares from their own shareholders without selling the business. The mechanism is a company-sponsored tender offer, and it has moved from a late-stage curiosity to a routine part of how private companies manage equity. What most owners underestimate is the second effect: a tender offer publishes a per-share price, and that price does not stay inside the transaction.

What a Company-Run Tender Offer Actually Is

A tender offer in this context is a board-approved liquidity event. The company, or an outside investor the company brings in, offers to buy shares from a defined group of holders at a fixed price during a limited window. Eligibility rules are set in advance: often current employees with vested options, sometimes former employees, sometimes early investors. Shareholders choose whether to participate, usually subject to a cap on how much any one person can sell.

The structure matters because it differs from the two alternatives owners usually consider. It is not a sale of the company, so control, strategy, and the cap table's basic shape stay intact. And it is not an uncontrolled secondary market, where individual shareholders find their own buyers at their own prices with the company watching from the sidelines. A tender offer sits in between: the company decides who can sell, how much, and at what price.

Mechanically, a broad-based offer typically runs for a 20 business day period, a timing requirement that comes from federal securities rules rather than from the company's preference. That window, plus the diligence and documentation that precede it, means a tender offer is a planned event on a multi-month timeline, not something a board arranges in a quarter-end scramble.

The Volume Behind the Trend

The activity is no longer marginal. Nasdaq Private Market, one of the larger platforms administering these programs, executed close to $15 billion in tender offer volume in 2025, up from roughly $3 billion in 2023. Across more than a decade of operation, the platform reports over $70 billion in transaction volume spanning 900-plus company-sponsored liquidity programs and more than 200,000 individual shareholders. Looking across all providers, US private companies ran an estimated $18.4 billion of tender offers in 2025, and roughly 110 companies completed a board-sponsored tender in the twelve months leading into mid-2026. Carta reported tender offer transaction value rising 200 percent in the first half of 2026.

The headline examples are large. Stripe organized a structured employee sale in February 2026 at a price implying a $159 billion company valuation. Anthropic's program allows current and former employees to sell up to roughly $6 billion of shares at a valuation near $350 billion.

The more useful signal for most owners is not the size of those programs but the direction of the trend line. Structured liquidity is drifting earlier in company life cycles. The reason is straightforward: equity compensation without a visible path to cash has lost persuasive power. In sectors where hiring is competitive, a share grant that cannot be converted to money for an indefinite number of years is worth less to the recipient than the grant letter suggests, and employees have learned to price that gap.

The Valuation Consequence Owners Miss

Here is where the liquidity decision becomes a valuation decision. Private companies that grant equity compensation rely on a 409A valuation, an independent appraisal establishing the fair market value of common stock for tax purposes. Options granted at or above that value avoid the penalties that Section 409A of the tax code imposes on discounted deferred compensation. The appraisal carries a safe harbor presumption of reasonableness, which is what makes the exercise worth paying for.

That safe harbor has two limits. It lasts twelve months, and it expires earlier if a material event occurs that would reasonably be expected to change value. A company-sponsored tender offer at a stated per-share price is close to the cleanest example of a material event that exists. Once the offer is announced, the prior 409A is stale for grant purposes, and options issued against the older, lower number are exposed.

The tender price then becomes evidence. Valuation professionals generally treat an arm's length, company-sponsored transaction at a known price as the strongest single data point available for common stock value, and it typically becomes the primary calibration anchor for the next appraisal. Worth noting: adopting the tender price directly, without commissioning a formal 409A report that applies a documented methodology, does not satisfy the safe harbor. The tender informs the appraisal. It does not replace it.

For an owner, the practical translation is that running a tender offer at an attractive price raises the strike price on every option granted afterward. That is not a reason to avoid a tender. It is a reason to sequence grants and the tender deliberately rather than discovering the interaction after the fact.

Why the Tender Price Sits Above the 409A Price

Tender offers commonly clear at 20 to 50 percent above the most recent 409A common stock value, and the spread is not evidence that someone got the valuation wrong. The two numbers answer different questions.

A 409A appraisal values common stock in isolation, subordinate to whatever preferred stock sits above it and burdened by the fact that a holder cannot readily sell. Appraisers capture that second problem through a discount for lack of marketability, and current benchmarks show those discounts running roughly 28 to 38 percent at seed stage and compressing to something like 8 to 18 percent for late-stage companies. Common-to-preferred price ratios follow a similar pattern, from roughly 10 to 30 percent at seed to 45 to 70 percent at late stage.

A tender offer removes the marketability problem for the shares it covers. The buyer is identified, the price is fixed, and settlement is administered. Some of the discount that justified the lower appraised value simply does not apply to a share sold into a company-run program. The gap between the two numbers is largely the price of liquidity, and it narrows as a company matures and its shares become easier to move.

That framing is useful in two directions. It explains to shareholders why the tender price exceeds the number on their option paperwork, and it explains to the board why the tender price cannot be treated as the company's valuation without qualification.

What to Watch

Three developments are worth tracking over the next several quarters.

The first is how far downmarket this practice travels. Structured liquidity was a late-stage tool, then a growth-stage tool, and providers now report adoption earlier still. Owners of profitable, closely held companies with no venture backing at all have begun asking whether a version of the same mechanism can solve minority shareholder liquidity without triggering a sale.

The second is the interaction with exit timing. When employees and early investors can access partial liquidity, the pressure to sell the company or go public eases. That is generally useful for owners who want more time, though it also means the eventual exit arrives with a shareholder base that has already taken money off the table and may evaluate an offer differently than one that has never seen a distribution.

The third is valuation discipline. As tender prices proliferate, they create a running record of what a company's shares have fetched. That record is an asset when the numbers move in the right direction and a complication when they do not, because a later transaction below a prior tender price is a fact that buyers, investors, and appraisers will all notice.