Identification

• A tender offer is a solicitation made by a company or third party to purchase shares of stock from a shareholder. The offer only lasts for a specified period of time and it consists of a fixed price, usually above the stock's market value.
  
  

Benefits

• In a tender offer, shareholders benefit by receiving a higher price than the stock's current market value. The purchasing entity benefits by not having to purchase the stock on the open market, often making the process a precursor of a takeover bid.
  
  

Considerations

• According to the Securities and Exchange Commission website, if the amount of stock purchased consists of more than five percent of the total securities owned by the selling company, the transaction must be registered with the SEC.