Market Insight Update: Tender Offer in the Secondary Market

Company sponsored secondary transactions (tender offers) are a mechanism by which the company allows an approved investor to purchase shares at a given price / corresponding valuation. Early investors and employees can opt to participate if they want liquidity and are receptive to the purchase price.  Depending on the amount of demand from the approved investor, shareholders can opt to sell a portion or all of their holdings to spreadhead their liquidity efforts thereby realizing monetary returns.

Although these tender offers aren’t an official primary funding round, they serve as a benchmark in terms of pricing for secondary market deals. Secondary buyers can opportunistically purchase shares at a similar valuation during a variety of transaction methods.

As an alternative, if shareholders would like a better price, then the shareholders can consider the secondary market later on and view competitive bids from vetted investors using a registered broker dealer like RainMaker Securities.