Tender Offers Favor Investors Over Employees

Private market liquidity started as a way for insiders to manage their own timing, not as a way to maximize employee outcomes. The pattern in the data is simple. Investors can sell small or strategic blocks early, often around seed through Series B, when access is scarce and prices still carry an exclusivity premium. Founders get the next layer of flexibility through one off secondaries. Employees usually wait for broad tender offers at much larger valuations, when the stock is less scarce and the tender is often priced off an older round.

• In the tender offer dataset, investors made up 50% of secondary transactions on average, founders 15%, and employees 33%. More than 70% of sales at valuations up to $21M came from investors, while 75% of employee transactions did not happen until companies were above $160M post money.
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• Employees are not just later to sell, they also tend to sell at worse prices. Tender offers were priced at or below the last round in 83% of cases, and heavier underpricing pushed employee participation down into the 10% to 30% range. That means the people with the least access also face the weakest pricing.
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• The structure of the market explains the ordering. Tender offers are usually issuer controlled, closed door transactions, often tied to a recent primary and priced from that reference point. More recurring, market driven programs improve price discovery and predictability, which is why later models focused on quarterly liquidity instead of one off events.
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The market is moving toward more regular and transparent liquidity windows, because that is the only way employee equity starts to function like real compensation before an IPO. As private companies stay private longer, the winners will be the ones that turn liquidity from an occasional favor for insiders into a repeatable program that reaches employees earlier and at market tested prices.