Before Your Tender Window Closes

I’m Mateo Dellovo, a fiduciary adviser for people paid in company stock. When a private company lets you sell some shares before any IPO, through a tender offer or a secondary sale the company has approved, you get a price, a window and a form. The price tends to take over the conversation. This page covers the money side, what the offer document decides, how the sale is taxed, the dates, and the questions to answer before the window closes.

A tender offer is an offer to buy shares from many holders at once, at one price, for a set time. At a private company the buyer is usually the company itself, buying back its own stock, or an outside investor the company has let in, often the lead investor in the last round. A secondary sale is narrower. One buyer, your shares, and the company’s consent, because the stockholders agreement or the bylaws usually restrict transfers and give the company or its investors a right of first refusal. A one buyer sale runs on its own dates, set by the purchase agreement and the company’s consent process, not the tender offer clock. The tax works the same way.

Some of the federal tender offer rules reach a private company’s offer, whoever makes it. A tender offer has to stay open at least twenty business days, and at least ten business days after notice of a change in the price or the number of shares sought. Under an SEC order of April 16, 2026, a private company’s own offer, for cash at a fixed price, can stay open as few as ten business days, with any change in the price or the number of shares sought announced by 9 a.m. Eastern on the fifth business day before it expires. An investor’s offer gets no relief under that order. An order like this can be changed or withdrawn, so the dates in your offer document are the ones that count.

When an investor makes the offer, the company has to tell you within ten business days whether it recommends for or against the offer, is neutral, or can’t take a position.

The rest is written in the offer document, and it differs from offer to offer. Who may sell, which is usually vested shares only, sometimes after a set number of years at the company, and sometimes including shares from options you exercise in the offer. How much each person may sell, often a share of your vested holdings with a cap, and a cutback when more shares are tendered than the buyer wants. Whether you can withdraw before the window closes. Who pays the paying agent. When the money is paid, which the rules say must be promptly after the offer ends. Read it twice, and write down every date in it.

Insider trading law applies to private company stock too. If you know something material that the public doesn’t, you can’t trade on it, and your company’s policy may add rules of its own.

Before you look at the price, decide how much of your net worth you want in this one stock after the window closes. It’s tempting to start from the other end. You look at the price, run the math on the shares you’re allowed to sell, and back into a number. That gets the decision backwards. The price is the buyer’s number. How much of your net worth sits in one company is yours.

The SEC puts the risk plainly. You’ll be exposed to significant investment risk if you invest heavily in shares of your employer’s stock. At 21, I had almost everything in one stock, CMGI. I learned early how much one price can change a plan.

So ask the question I ask before I own anything. If I could never sell it, would I still want to own it? And would I want this much of it? A tender offer is one of the few moments a private company shareholder gets to act on the answer. Decide the number, then let the offer document tell you how far this window lets you get toward it.

You aren’t selling “my shares.” You’re selling lots, and each lot carries its own tax history. Write them down before you fill in the form.

Shares from RSUs became pay the day they were delivered. Your basis is the value that was counted as income, and the holding period runs from just after that day.

With shares from nonqualified options, the spread at exercise, the value that day minus what you paid, was pay. Your basis is the exercise price plus that income, and the holding period runs from the exercise.

Shares from incentive stock options are different. Exercising added no regular income, though it may have added alternative minimum tax. Sell them within two years of the grant or one year of the exercise and it’s a disqualifying disposition. The spread at exercise, capped at your actual gain, is pay, and the rest is capital gain. Nothing is withheld on that pay, so it lands on your return.

Shares you bought early with a section 83(b) election carry a basis of what you paid plus anything counted as income at the time, with the holding period from the transfer.

If the offer lets you exercise options to sell the shares into it, the exercise has its own tax. A nonqualified exercise is pay, withheld like a bonus. Your employer can withhold federal income tax at a flat 22% up to $1 million of supplemental wages in a year, and must use 37% above that. An incentive stock option exercised and sold in the same year is a disqualifying disposition, with no alternative minimum tax adjustment because the regular tax and the AMT treat it the same way.

The gain on each lot is the price minus your basis. Lots held more than one year are long term, taxed at 0%, 15% or 20% for 2026 depending on your taxable income, and the part of a qualified small business stock gain that the percentage limit leaves in is taxed at up to 28%. Lots held one year or less are short term, taxed like pay. The window decides which lots you can still make long term by waiting, and which you can’t.

A 3.8% net investment income tax applies to investment income, this gain included, to the extent your modified adjusted gross income is above $200,000 if you file single, or $250,000 if you file jointly. Those thresholds aren’t indexed, so a tender offer can put many people over them for the year.

If the offer price is above the company’s most recent appraised value, the 409A valuation that sets option prices, the company or the buyer may treat some or all of the difference as compensation rather than sale proceeds, withhold tax on it and report it as wages. The offer document should say whether this applies to your sale and how it is handled. Ask before you tender, because it changes both the tax and what lands in your account.

Withholding on the pay part, where there is one, is an estimate. Normally nothing is withheld on the capital gain. If you expect to owe at least $1,000 after withholding, and your withholding covers less than the smaller of 90% of this year’s tax or 100% of last year’s, 110% if last year’s adjusted gross income was over $150,000, or $75,000 if married filing separately, the IRS expects estimated payments. They fall in April, June, September and the following January, and a sale counts in the period it lands in.

Your state taxes the gain its own way, and which state can tax it may turn on where you lived while you earned the shares as well as where you live when you sell. California taxes all capital gains as ordinary income and doesn’t follow the federal qualified small business stock exclusion.

Some private company shares qualify for the section 1202 exclusion, which can shield a large piece of the gain from federal tax. The stock has to be C corporation stock you acquired at its original issue, from the company, for money or property or as pay for your work, and the company has to have passed the gross assets test when it issued the shares and run an active business for substantially all of the time you held them. Shares bought from another holder don’t qualify.

The holding period is the test a tender offer runs into. For shares acquired on or before July 4, 2025, the exclusion needs more than five years. For shares acquired after that date, it’s 50% of the gain at three years, 75% at four and 100% at five. Sell a qualifying lot into the window a few months early and the exclusion on that lot shrinks or disappears. Which lots you tender, and which you hold, decides whether the exclusion survives.

When the company itself is the buyer, there is a second test. Stock isn’t qualified small business stock if the company bought stock back from you, or a person related to you, in the two years before or after that stock was issued, beyond a small amount. And a large buyback by the company, more than 5% of all its stock in the year before or after an issuance, can disqualify the shares issued in that window, whoever holds them. The regulation has exceptions for shares bought back when someone leaves the company, dies, becomes disabled or divorces. If you expect new grants or an option exercise soon, ask the company how it has looked at this before you sell into its own offer.

Gain excluded under section 1202 on stock acquired after September 27, 2010 isn’t an alternative minimum tax preference. And if you sell qualifying stock you’ve held more than six months, section 1045 lets you defer the gain by buying other qualified small business stock within 60 days, if you elect to.

The launch date starts the clock, at least twenty business days under the rules, and as few as ten for a private company’s own cash offer under the 2026 order. The expiration date is the one the offer document names, and the rules say any extension has to be announced. If the price or the number of shares changes, the window has to stay open at least ten business days after the notice. After it closes comes the acceptance notice, with any cutback, then payment, which the rules say must be prompt, usually through a paying agent.

Then the tax dates. The gain lands in the tax year the sale is completed and paid, and that sets the estimated payment date for that period. An offer that expires in late December and pays in January needs a closer look.

The following January or February brings the forms. A Form 1099-B if a broker handled the sale, or if the company regularly buys back its own stock, and a W-2 line if any of the price was treated as pay. For shares from options or awards granted after 2013, the basis on a 1099-B leaves out the compensation income, so check it against your own records and adjust on Form 8949, or you pay tax on that income twice.

One more date that nobody sends you. The day you decide how much of your net worth should sit in this one stock after the window closes. Set it before the offer document arrives if you can.

Decide what the money is for in the next few years before it arrives, the tax reserve first, then the rest. And the shares you keep are still a decision. The next window may be a year away, or it may not come, so decide how much to keep on purpose rather than by default.

1. Who is the buyer, the company or an investor, and what does the offer document say about eligibility, limits, cutbacks, withdrawal and the payment date?
2. Which lots are you selling, and how long have you held each one?
3. What is your basis in each lot, and what did the company already count as pay?
4. Is the price above the company’s appraised value, and how will the company or the buyer report the difference?
5. Could any of your shares qualify as qualified small business stock, and does selling now, or selling to the company itself, change that?
6. If you exercise options to sell into the offer, what does the exercise add to this year’s tax?
7. What will the sale add to this year’s tax, federal and state, and does it call for an estimated payment?
8. How much of your net worth will sit in this one stock after the window closes, and how much do you want there?
9. What are the proceeds for in the next few years?
10. Which tax year does the payment land in?