Last Updated: January 10, 2022

Equa On Participating In a Tender Offer

A tended offer allows employees and investors the opportunity to sell shares even if the company is not yet public. They also allow buyers to gain equity in a company that is still private.

Not Sure About Participating In a Tender Offer?

Tender offers are a great option for many but could not be for you. There are three steps (at least) you should take before entering into a tender offer agreement. The first step is to attend the informational meeting about the offer. Companies often hold a few informational meetings leading up to the tender offer in order to give potential buyers and sellers a better understanding of the particular tender offer guidelines.

The next step is to carefully go through all documents the company gives you regarding the tender offer. These will often describe how the company is doing, where it is going, and the rules and guidelines for the offer.

Another step to take before entering a tender offer is to speak with a financial advisor. Whether you already have a financial advisor or not, they can help you decide if participation is a good idea for you given your financial situation currently. Advisors can take into account your financial goals or help you determine those goals if you do not already have them.

Taxes on Tender Offers:

Tender offers are taxed by ordinary income tax. This means when you sell your shares, you pay tax on the difference between your strike price and the value of them when you sold them. If you tender shares of a company you already own, capital gains taxes will apply to you. This means you’ll pay taxes on the increase in value of the shares difference of exercise price and the share sale price. Capital gain can be both long-term and short-term so make sure you do your research.


For more information check out more Equa blogs.