Tender Offer Dilemma: Cash Out Now Or Hold For The Big Win?
True Root Financial is a fee-only financial advisor and financial planner based in San Francisco, CA. We serve clients across the globe.
Tender offers used to be rare. Today, with San Francisco startups staying private longer and IPO windows opening and closing unpredictably, they have become a very real moment of truth for high-earning tech executives. Suddenly, you are faced with a choice: do you turn paper wealth into real dollars today, or do you hold out for a bigger exit later?
If you are a tech professional interested in learning how we can help you claim your financial independence by investing wisely, minimizing taxes, and maximizing your equity compensation, please book a no-obligation call here.
Key Takeaways
- Tender offers are now one of the few real liquidity events for Bay Area tech executives, long before an IPO
- Your decision depends on four things: the offer price, your diversification needs, timing and risk of forfeiture, and taxes
- Different equity types behave differently during tender offers, and these differences can materially change your outcome.
Most executives benefit from selling some shares, not all or none.
As a fee-only fiduciary who works with Bay Area executives, I see this moment come up more often than ever before. And while every situation is unique, the framework for making a smart decision remains the same.
What Is A Tender Offer?
A tender offer is when your company, or a third-party investor, offers to buy a portion of your private shares at a fixed price. You get a deadline, a maximum number of shares you can sell, and a clear set of eligibility rules. It is the company’s way of providing limited liquidity without going public, often timed around fundraising or retention events.
For many executives, a tender offer is the first time their equity becomes real. But participating blindly, or skipping it entirely, can cost you more than you realize.
Price: Is The Offer Good Enough?
Everything begins with the price. Some tender offers are generous and reflect recent strong performance. Others are intentionally conservative or take place after a down round. The core question is simple: Does selling at this price improve your financial life today?
If you have been with the company for many years and the offer reflects a meaningful gain, locking in that win may align with your long-term goals. If you joined recently, or if the company’s latest valuation dipped, selling might feel too early.
In reality, it is less about predicting the future and more about balancing opportunity and risk. Since most executives cannot sell their entire holdings anyway, selling a portion can help you dollar-cost average out over time. You take some chips off the table, but you still keep exposure to future upside.
Diversification And Liquidity: Protecting Your Net Worth
One of the biggest risks I see as a San Francisco fiduciary is overconcentration. Many of my clients earn strong salaries, but their real wealth sits in one place: their employer. If something goes wrong at the company, that risk hits twice. Your equity falls in value, and your job is affected.
Tender offers help break this pattern. Selling a portion gives you the chance to diversify into assets that match your long-term plan instead of keeping everything locked into one company. Whether you invest in index funds, a tax-efficient portfolio, or long-term planning vehicles, diversification is a form of protection.
Liquidity also matters. Maybe you are planning a home purchase in the Bay Area, building savings, funding children’s education, or simply wanting breathing room. Your salary alone may not get you there, but a partial tender offer sale might. Liquidity is not just convenience; it is part of financial stability, especially in a high-cost city like San Francisco.
Timing And Risk: Could You Lose Equity Later?
Your employment timeline plays a major role. If you think you might leave the company in the next one to two years, a tender offer becomes more important. Here’s why:
Unexercised options typically expire within 90 days of leaving.
Double-trigger RSUs require both time and a liquidity event, and if the company delays that liquidity event long enough, your unvested or untriggered RSUs could expire.
Old option grants quietly approach their 10-year expiration dates and can disappear entirely if you do not exercise in time.
I frequently meet executives who are unaware that several of their grants are much older than they think. A tender offer can provide cash to exercise older options, protect shares that are at risk of expiring, or unlock value before a job transition.
Tax Impact: The Part Most Executives Underestimate
Taxes are the area where I spend the most time with clients, because this is where outcomes can drastically differ.
Incentive stock options have the most favorable tax treatment if you satisfy the holding requirements and avoid triggering AMT incorrectly. Selling too soon could convert long-term gains into ordinary income.
Nonqualified stock options create ordinary income at exercise, and the timing of exercise and sale determines whether the remaining gain is short- or long-term.
RSUs are taxed as income at vest, which means tender offer sales often result in cleaner capital gains on the appreciation afterward, but still require thoughtful planning.
Not all equity is equal. Some lots are more tax-efficient to sell than others. Some should be held for long-term gains. Some might be beneficial to sell specifically because they create taxable income that offsets AMT risk. This is where a fee-only fiduciary can help you model different scenarios based on your holdings, cost basis, and tax projections.
So, Should You Participate In The Tender Offer?
Most executives do best with a balanced approach. Selling everything leaves you with no upside. Selling nothing leaves you overexposed and illiquid. Selling a thoughtful portion allows you to reduce concentration, manage taxes, protect aging equity, and still benefit from future company growth.
Your Next Steps:
A tender offer is one of the few moments when a private company executive gets a genuine choice. This is your chance to turn hard-earned shares into long-term, durable wealth and put your financial future on your timeline, not the company’s. If you want clarity before making a six-figure decision, book a free consultation below:
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