The email arrives on a Tuesday. The subject line is something bloodless like “Employee liquidity program,” and inside there is a price per share, a set of eligibility rules, a cap on how much you can sell, and a deadline about three weeks out.
You forward it to your spouse. Then the two of you spend the next twenty days doing something you have never done before, which is trying to decide how much of the thing you built your career around to convert into money.
Most people I talk to arrive at the deadline having done the math on how much they could get and almost none of the thinking about what happens if they do nothing. And doing nothing feels like the safe option, because it does not require an action, does not create a tax bill, and does not require telling anyone anything.
That instinct is the expensive part. Declining to participate is not staying put. It is a decision to keep every dollar of that exposure at the current price, made deliberately, with a liquid alternative available and declined.
A tender is a window, and windows close
Start with what this actually is.
At a private company there is normally no way to turn your shares into money. There is no market. A tender offer, or a company-run liquidity program, is an arranged exception. An investor or the company itself agrees to buy a limited quantity of employee shares at a set price during a set period.
Those exceptions are not scheduled and not guaranteed. Some companies run them regularly. Some run one and never run another. Some run one and cancel it. The next one may come at a higher price, a lower price, or not at all, and nobody at your company can promise you otherwise.
That is the first thing that makes this different from any other financial decision you make. The choice is not just how much to sell. It is whether to use a rare liquidity window that you cannot count on getting again, on a schedule you did not choose, with a deadline you cannot extend.
Everything about the mechanics of your particular offer lives in the tender documents and your plan document. Read both. Where anything is unclear, ask your equity administrator directly and in writing.
Selling nothing is a position, not the absence of one
Here is the reframe that changes the conversation in my office more than any other.
Imagine the tender proceeds were already sitting in your checking account. The full amount, in cash, today. Now ask yourself how much of that cash you would use to buy shares of your employer at exactly this price.
For most households, the honest answer is not all of it. Very few people would voluntarily take a large cash balance and put the entire thing into a single private company’s stock, illiquid, junior to a preference stack, dependent on one outcome, at a company where their salary, their health insurance, and their next promotion already live.
But that is precisely the position you hold when you decline to participate. Not selling is economically the same as selling and immediately buying it all back at the tender price. It is the same bet, made freshly, with full information, at today’s number.
That does not mean the answer is to sell. Plenty of people run this exercise and conclude they want most of that exposure, for reasons that are perfectly sound. What it does mean is that inaction stops being free. You are making a choice either way, and the version where you do nothing is the one where you make it without noticing.
The concentration math nobody runs before the deadline
The second exercise is arithmetic, and it takes about ten minutes.
Add up everything your household owns that is liquid and diversified. Cash, brokerage accounts, retirement accounts, the equity in the house if you want to count it. Then put your company equity next to it, valued the only defensible way, which is at the price actually on the table in the tender.
The numbers that follow are illustrative and invented to show the shape of the calculation. They are not a recommendation and they are not anyone’s actual situation.
A household has six hundred thousand dollars across brokerage and retirement accounts. Their vested company equity, priced at the tender, comes to two million. Company stock is therefore about seventy-seven percent of their investable net worth, in a single private position, at the same company that pays both the mortgage and the health insurance if one spouse works there.
Now run the same figure after a hypothetical partial sale. Sell enough to move four hundred thousand into diversified assets and the split changes to one million dollars diversified against one million six hundred thousand concentrated, or about sixty-two percent. Still concentrated. Still a large bet on one company. But a different household in a bad year, which is the point we made in the piece on why the goal is not to bet less.
I am not telling you sixty-two percent is right or that seventy-seven is wrong. There is no correct percentage, and anyone who hands you one without knowing your spending, your cash reserve, your other income, and your timeline is selling you something. What I am telling you is that most people have never once calculated the number, and it is hard to decide well about a position whose size you have never measured. We worked through that threshold in the article on how much of your net worth belongs in your employer’s stock.
The price on the table is a fact. Everything else is a forecast
Employees usually evaluate a tender against a mental picture of the exit. If I hold, this could be worth several times more.
It could. It could also be worth less, and the range of outcomes for a private company is wider in both directions than most employees model. A previous piece on pre-IPO tender offers and their tax treatment covers a good deal of the mechanical side of this.
What is worth adding here is a distinction. The tender price is a real number that a real buyer will actually pay you in cash within a defined period. Every other number in the comparison, the IPO price, the acquisition price, the value at some future round, is an estimate of an event that has not happened and may not.
Comparing a certainty to a forecast is not the same as comparing two forecasts, and the decision deserves to be framed that way. Note also that the tender price is not necessarily your company’s 409A price or its most recent preferred price. As we covered in the recent piece on what a private company equity number actually measures, a headline valuation and the price your shares command are different things.
The constraints that decide this before you do
Several things can narrow or remove the decision entirely, and they are all in documents rather than in judgment.
- Eligibility. Some programs limit participation by tenure, employment status, share class, or share type.
- The cap. Most programs limit how much any individual can sell, often as a percentage of holdings or a dollar ceiling.
- Options versus shares. If you hold unexercised options, participating may require exercising first, which means finding cash and creating a taxable event before you have proceeds in hand.
- Vesting and blackout terms. What is vested as of the offer date, and what your plan permits.
- Tax treatment. This varies by what you hold, how long you have held it, and how your company structures the transaction. It is the single most consequential item on this list and the least suitable for a general answer.
Every one of these is company-specific and plan-specific. Ask your equity administrator for the tender documents and your plan document, read them together, and take the tax question to a CPA who has seen private company transactions before the deadline rather than in April.
The decision you are actually making
Strip away the mechanics and it comes down to something simple.
You have a rare chance to convert part of a concentrated, illiquid bet into money you can use, at a price a buyer will actually pay, on a deadline you cannot move. The choice is not between selling and safety. It is between two different portfolios, one of which you would have to actively purchase today if you did not already own it.
Decide it on purpose. Run the cash exercise. Run the concentration number. Read the documents. Then make the call with your spouse, in a conversation you schedule rather than one you have the night before the deadline.
Whatever you choose, choose it. The households that regret a tender are almost never the ones who sold too little or too much. They are the ones who let the window close while they were still meaning to look into it.