Your company just announced a tender offer. You have two weeks to decide how many shares to sell—and the decision is irreversible.
The form is open on your screen. You're staring at a blank field that could significantly influence your financial future. Sell shares and realize meaningful liquidity today, or keep your shares and retain more exposure to potential future growth. You're an early employee at a private tech company. Your equity is worth around $15 million on paper. This is your first real chance to consider turning some of that into actual money.
It's exciting. It's also understandably stressful.
Sell too much and you might kick yourself later if the company’s value increases substantially. Sell too little and you're still overexposed to one stock—and if the value drops or those shares become illiquid, a huge chunk of your wealth could evaporate before you can do anything about it.
So here's the question: What factors should you consider when deciding whether, and how much, to sell?
This discussion is for general informational and educational purposes only and is not intended as individualized investment, tax, or legal advice. Your circumstances, tax treatment, and options may differ materially from the examples described.
What Is a Tender Offer?
Before diving into the decision, let's define what we're talking about. A tender offer is when a private company or an outside investor offers to buy shares from employees and early investors at a set price. It provides liquidity before an IPO or acquisition—essentially a chance to convert some of your paper wealth into cash while the company is still private.
These offers typically come with constraints: you might only be able to sell a portion of your vested shares (often 10-50%), and you'll have a limited window to decide (usually 10-20 days from announcement).
That sounds like plenty of time, but it's not. You need to gather information, run tax projections, possibly consult advisors, and make peace with considerable uncertainty. Starting to think about this framework as soon as the offer is announced can be helpful.
The Framework: Making This Decision Intentionally
There's no formula for this. It's a judgment call—part spreadsheet, part gut check—about where your conviction in the company ends and your need for control begins.
What follows is a framework for thinking through this decision systematically. We'll start with what liquidity actually means for your life, then walk through how to weigh upside against downside, rethink what risk really is, use partial sales strategically, and keep your eye on what actually matters.
Step 1: See What Liquidity Would Actually Do for You
Let's bring this down to earth.
Before you start modeling valuations or obsessing over upside scenarios, ask yourself something simpler: What would selling shares actually change for you?
This is where the decision starts to get real. You're not trying to maximize some theoretical return—you're trying to create flexibility you can actually use.
Let's walk through a hypothetical scenario to illustrate how this framework works in practice. This example is for educational purposes only, is hypothetical in nature, and does not reflect actual or guaranteed results. Your specific situation, tax treatment, and circumstances will be different.
In this scenario, imagine a California resident with $15 million in company equity—shares from early stock options held for more than a year that qualify for long-term capital gains treatment. The tender offer lets them sell up to 50% of vested shares—a maximum of $7.5 million.
They model three scenarios: selling 25%, 40%, or 50%.
With a possible combined federal and California long-term capital gains taxes around 38% (as of 2025), here's what they'd actually walk away with:
Liquidity Today (After ~38% in Taxes) - Hypothetical Example
| % Sold |
Gross Sale |
After-Tax Cash |
| 25% |
$3.75M |
$2.33M |
| 40% |
$6.00M |
$3.72M |
| 50% |
$7.50M |
$4.65M |
This is real money that could change how you think about your future. It might fund retirement, set up education accounts, or provide the foundation to build diversified wealth beyond company stock. Liquidity isn't just about spending—it's about potentially turning years of hard work into greater financial flexibility.
But selling also changes your relationship with what you keep. The shares that stay invested are still tied to the company's performance and long-term potential. Let's look at what happens in this hypothetical if things go really well (the company doubles) or really poorly (it gets cut in half):
Equity Still Invested - Hypothetical Example
| % Sold |
Value Today |
If Company Doubles |
If Company Halves |
| 25% |
$11.25M |
$22.50M |
$5.63M |
| 40% |
$9.00M |
$18.00M |
$4.50M |
| 50% |
$7.50M |
$15.00M |
$3.75M |
What you keep represents your conviction in the company's future. But it's also your exposure—the part of your wealth that depends entirely on how things unfold.
Now let's put both pieces together—the cash you've locked in and the equity you're still holding. Looking at them side by side shows how the overall picture shifts:
Total Current Net Worth (Cash + Equity at Today's Value) - Hypothetical Example
| % Sold |
After-Tax Cash |
Remaining Equity |
Total |
| 25% |
$2.33M |
$11.25M |
$13.58M |
| 40% |
$3.72M |
$9.00M |
$12.72M |
| 50% |
$4.65M |
$7.50M |
$12.15M |
Key observation: As you sell more in this hypothetical scenario, total net worth dips slightly due to taxes on realized gains. The tradeoff is liquidity, control, and stability. You're shifting from concentrated potential to financial flexibility. For many people, once they see the full picture, that trade may feel worth it.
Step 2: How Much Upside Are You Really Trading Away?
Now that you know what liquidity does for you today, let's look forward.
What happens to your total wealth if the company doubles? Stays flat? Drops by half?
This isn't about predicting the future—nobody can do that. It's about understanding what each choice really means for your financial life.
Here's what total wealth (after-tax cash plus remaining shares) might look like under each scenario in our hypothetical example. These figures are illustrative only and do not represent actual or expected performance.
Total Wealth Under Different Outcomes - Hypothetical Example
| % Sold |
If Company Doubles |
If Stays Flat |
If Company Halves |
| 25% |
$24.8M |
$13.6M |
$7.9M |
| 40% |
$21.7M |
$12.7M |
$8.2M |
| 50% |
$19.6M |
$12.2M |
$8.4M |
Key observation: Selling less keeps upside exposure wide open—but leaves you most exposed if things go sideways. Selling more reduces that exposure and smooths out the extremes—you give up some upside, but you get a steadier floor. Somewhere in the middle, you're trading potential for peace of mind.
The math just makes the tradeoffs visible. The real decision is about how much volatility you're willing to live with when you don't have to.
Step 3: What's the Real Risk Here?
Here's the thing about risk: it's not just about whether your company's value goes up or down.
Upside adds to your wealth. But downside? Downside can reshape your life.
The hardest part about concentrated positions is that they don't always give you time to react. Private company valuations can be volatile and may drop 50-70% when market conditions shift or growth slows—and when that happens, tender offers often stop. The companies that were offering liquidity at peak valuations may not offer it again for years, if ever.
Many people pass on tender offers because they're waiting for an even higher price, or don't want to "leave money on the table," or feel like selling is somehow betting against their team. Then the window may close. Valuations may reset downward. And suddenly those illiquid shares represent a very different financial picture than they did six months earlier.
When values fall quickly or liquidity dries up, what once looked like conviction can turn into loss. In some cases, there may not be another opportunity to sell for an extended period.
Will My Company Think I Don't Believe in Them?
This is one of the biggest emotional barriers people face. The answer: probably not, and if they do, that's not your problem.
Selling in a tender offer is a personal financial decision. You're managing your family's wealth and risk. Companies understand this—that's why they offer these opportunities in the first place. Your colleagues and managers are likely making similar calculations.
If someone judges you for taking liquidity, they're confusing professional conviction with personal financial prudence. Those are different things. You can believe deeply in the company's mission and still recognize that having 80% of your net worth in one illiquid asset is risky.
Selling shares isn't about losing faith in the company. Some people think of it as reducing "regret risk"—the kind that can come from holding too long and wishing they'd locked in more when they had the chance.
The goal is to get to a place where, no matter what happens, you are more likely to feel that you acted thoughtfully with the information you had at the time. That's what good planning feels like. Not certainty—confidence that you acted intentionally.
Step 4: Should You Sell All or Nothing?
Here's something people forget: liquidity doesn't have to be all or nothing.
You might sell 40% now, another 20% in a future tender offer, and hold the rest through a potential IPO. This staged approach means you're never making an all-or-nothing bet on timing.
Each sale creates a different layer of stability:
- The first sale brings security
- The next adds flexibility
- What remains preserves your conviction in what you helped build
One Approach: Staged Selling
Here's a hypothetical example of how staged selling might work. This is illustrative only—not a recommendation.
Imagine someone owns shares worth $10 million today. They believe the company will continue growing, but the timeline to IPO is uncertain—could be two years, could be five.
One possible staged approach:
- Tender offer today: They might sell 30% ($3M gross, ~$1.9M after tax) and use proceeds for goals like paying off a mortgage, funding education savings, or building a diversified portfolio. Their financial stress may drop.
- Next tender (if it happens): They could sell another 20% ($2M gross at same valuation, or more if value has increased). Now they have significant liquid wealth outside the company.
- Hold through exit: They keep 50% ($5M today, potentially much more at IPO) for maximum upside participation.
This way, they've reduced concentration risk meaningfully but they're still "in the game" with significant exposure. If the company triples from here, they still benefit substantially on the remaining stake. If it stalls or declines, they've protected more than half their wealth.
By spreading decisions across multiple liquidity events, you take the pressure off any single moment. You stay invested in the company's story, but your personal finances no longer depend entirely on how it ends.
So How Might You Evaluate How Much to Sell? Questions to Help Frame Your Decision
After walking through the framework, here are questions people commonly ask themselves based on their situation. These aren't recommendations—every situation is unique—but they may help you reflect on your own circumstances:
Questions if you're considering selling 50%+:
- Does company equity represent more than 70% of your net worth?
- Do you have less than a year of expenses in liquid savings?
- Do you have specific near-term goals (home purchase, education funding, debt payoff)?
- Does the company's path to IPO feel uncertain or more than 3 years away?
- Would you lose sleep if the valuation dropped 50%?
- Does this represent a life-changing amount that would fundamentally alter your financial security?
- Are you within 5 years of retirement?
- Do you have dependents who rely on this wealth?
If you answered yes to several of these questions, some people in similar situations choose to sell a larger portion. The right answer depends on your complete financial picture and personal risk tolerance.
Questions if you're considering selling 30-50%:
- Is company equity 40-70% of your net worth?
- Do you have adequate emergency reserves but want to diversify?
- Do you believe in the company but recognize the concentration risk?
- Would you be disappointed but financially okay if the value dropped?
- Do you want to lock in meaningful liquidity while keeping significant upside?
- Has the company's path forward become materially more uncertain than when you joined?
People who answer yes to several of these often find that a moderate sale balances their goals. Your specific percentage may differ based on your circumstances.
Questions if you're considering selling 10-30%:
- Is company equity less than 40% of your net worth?
- Are you financially secure with substantial assets outside this position?
- Does the company have clear momentum toward a near-term exit?
- Do you have high conviction in continued growth?
- Do you want to establish some liquidity but preserve maximum upside?
Some people in this situation opt for a smaller sale to create flexibility while maintaining most of their position.
Questions if you're considering selling 0-10%:
- Does this equity represent "bonus" wealth on top of financial security?
- Are you comfortable with the company becoming your largest financial commitment?
- Would you be fine if the shares lost significant value?
- Do you have maximum risk tolerance and long time horizon?
People who answer yes to most of these questions sometimes choose to hold most or all of their position.
Common Approaches for Managing Proceeds
Once you've sold, having a plan for the money can help prevent common pitfalls—like letting cash sit idle for months or rushing into concentrated bets that recreate the risk you just reduced.
Here are approaches many people take. Your situation may call for a different strategy:
1. Tax planning
Many people start by getting a tax projection to determine what they'll owe. Your tax rate depends on whether your gains qualify for long-term capital gains treatment (shares held over one year, typically 20-38% combined federal and state) or short-term (under one year, taxed as ordinary income at your marginal rate, potentially 40-50%+). The difference can possibly be tens or hundreds of thousands of dollars.
Once they know the number, many people set aside that amount in a high-yield savings account earmarked for their anticipated tax payment. Your tax advisor can clarify when and how the payment should be made, as this varies by individual circumstances. Many individuals prefer not to invest these funds since they expect them to be used for taxes.
2. Building financial foundation
Before anything else, many people ensure they have adequate living expenses in accessible cash. This might be six months for some people, twelve or more for others—it depends on income stability, family situation, and what lets you sleep at night. If you don't already have this cushion, now may be the time to build it.
This is a stability layer that can change how you make every other financial decision. When you have reserves, you can take career risks, wait for the right opportunity, and weather surprises without panic.
3. Funding specific goals
If you sold partly to fund a home down payment, education expenses, or to pay off debt, following through on those plans makes sense. Don't let the money sit around while you overthink it. You sold for a reason.
4. Diversification
The cash left after taxes, emergency fund, and specific goals can go into a globally diversified portfolio matched to your time horizon and risk tolerance. For many people, that means considering low-cost index funds across stocks and bonds. Depending on the size of your proceeds and your tax situation, you might also explore strategies like direct indexing or separately managed accounts that can generate tax losses to offset gains—potentially even in the same year as your tender offer sale, or to bank losses for future liquidity events.
Some people are tempted to take their newfound liquidity and make concentrated bets—individual stocks, crypto, angel investments. Without expertise in these areas, this can recreate the concentration risk you just reduced.
5. Considering your next move
With liquidity comes options. Maybe you can finally take that career risk you've been thinking about. Maybe you can be more thoughtful about your next role instead of chasing the highest salary. Maybe you can take a sabbatical or start something of your own.
Liquidity can buy additional freedom—how you use it depends on your goals, obligations, and risk tolerance.
Step 5: Keep the Real Goal in Focus
Selling company stock isn't about timing the market perfectly. It's about turning uncertainty into control.
If liquidity helps you fund life goals, reduce stress, or take new professional risks, it's already doing its job.
The people who feel best about these decisions years later aren't the ones who somehow called the top. They're the ones who sold enough when it mattered—and kept enough to stay optimistic about what they helped build.
Facing this decision and want help thinking it through?
These choices are deeply personal and complex. The right answer depends on your complete financial picture, not just the numbers in this example.