A tender offer is a formal, time-limited offer to purchase securities directly from their holders, at a stated price, under procedural rules designed to protect investors. In the alternatives market, tender offers appear in three distinct roles: issuer buybacks that provide liquidity, the repurchase mechanism of tender offer funds, and unsolicited third-party offers to buy non-traded shares — usually at deep discounts.
The framework
Tender offers are governed by the Williams Act provisions of the Securities Exchange Act of 1934 and SEC rules that impose common protections: minimum offer periods (generally 20 business days), withdrawal rights while the offer is open, pro-rata acceptance when offers are oversubscribed, and equal treatment of tendering holders. Issuer self-tenders follow Rule 13e-4’s disclosure regime. The mechanics matter because a tender is a decision with a deadline — holders must evaluate price against value and respond, or do nothing and keep their shares.
Where advisors encounter tenders
Issuer tenders as liquidity events. For unlisted vehicles, a self-tender is a standard way to return capital or provide an exit — a non-traded REIT or non-traded BDC offering to repurchase a portion of shares, sometimes as part of a wind-down or strategic transition. Terms deserve reading: price relative to NAV, the portion of shares sought, and proration risk if the offer is oversubscribed.
Tender offer funds. These registered closed-end funds provide liquidity through periodic tender offers conducted at the board’s discretion — unlike an interval fund's committed repurchase policy. Same family, weaker liquidity commitment; the distinction belongs in every suitability conversation about semi-liquid wrappers.
Third-party mini-tenders — the ones to slow down for. Holders of non-traded REITs and other unlisted securities regularly receive unsolicited offers from third-party firms to buy their shares, frequently priced well below the sponsor’s NAV or recent transaction price. “Mini-tenders” (offers for under 5% of a class) avoid most of the SEC’s tender rules — reduced disclosure, weaker withdrawal rights — and regulators have repeatedly warned that they rely on holders not comparing the offer price to available alternatives. They are not inherently improper: for a holder who needs cash now, in a product whose redemption program is suspended or oversubscribed, a discounted certain exit can be a rational trade. The advisor’s job is making the comparison explicit — offer price versus NAV, versus the redemption program’s terms and queue, versus simply waiting — so the discount is a choice rather than an accident. Sponsors typically respond to these offers with board recommendations; those letters, and the offer documents’ own disclosures, are the reading list.
FAQ
What is a tender offer in simple terms?
A public “we’ll buy your shares at this price, until this date” — from the issuer itself, or from an outside party — with rules about disclosure, timing, and equal treatment.
Why did I get an offer to buy my non-traded REIT shares below NAV?
Third-party firms make a business of buying illiquid shares at discounts, profiting from the gap between the offer and the shares’ stated value. Compare the price against NAV and against the REIT’s own repurchase options before responding.
Do I have to respond to a tender offer?
No — not tendering means keeping your shares on unchanged terms. Tendering into an oversubscribed offer may also result in only partial acceptance, pro rata.
What's the difference between a tender offer fund and an interval fund?
An interval fund is contractually committed to periodic repurchase offers; a tender offer fund’s board decides each time whether to conduct one. The interval fund’s commitment is the stronger liquidity feature.
Related terms
Tender Offer Fund · Redemption Program · Non-Traded REIT · NAV · Interval Fund · Wind-Down
Educational content only; not investment, tax, or legal advice. Consult qualified professionals regarding your specific circumstances.
