6 Liquidity Event Tips to Better Manage a Tender Offer

December 7, 2020 Shareworks Marketing

Illustration of employees discussing tender offer tips at work.

Managing a tender offer or buyback can be a complicated process. From drafting legal documents to communicating the transaction details and collecting documentation, and then moving money, there is a lot to juggle. It's no simple task.

We've transacted over one billion dollars in the past eight months running tender offers and helped some of the best private companies grant liquidity to their shareholders. Along the way, we learned a few tips and tricks to help make running a liquidity event easier.

1. Keep Your Data on an Equity Plan Management Solution that Runs Tender Offers

One of the hardest parts of running a tender offer is moving your data back and forth between your equity plan and your tender offer provider. It's a breeding ground for mistakes and a massive hassle for administrators.

Solving this problem can be pretty straightforward. When you leverage an equity management platform to house and structure your data, it:

·  Keeps your equity plan data spotless and up to date

·  Provides data integrity during your secondary transaction

·  Engages participants via a platform they already know

With all of your equity data centralized in Shareworks, it's easier to both manage your equity plan and run a tender offer. Your cap table stays up-to-date and accurate and eliminates the need to learn a new system to manage a tender offer. By using Shareworks as a single solution, you reduce the risk of errors and points of failure.

2. Tender Offers Benefit from Flexible Administrative Controls

A lot of decisions go into running a tender offer. How many shares are you going to allow employees to sell? What is the total value you want shareholders to transact? How many people are going to participate, and who? How are you going to communicate with sellers? Do you need to change those decisions along the way?

Shareworks gives you complete control over your tender offer and process. You'll get administrative control over participants and transaction values, allowing you to limit the quantity or value of shares sold and gives you the ability to apply cutbacks as needed. You will also be able to customize the frequency and wording of all of your communications to participants. You can create the notification groups as you see fit and include custom tags to allow for a personalized message.

3. Real-Time Data Gives You Better Visibility into Your Tender Offer

Having up-to-date records is critical during a secondary transaction so you can see the value of transactions, who is participating and reconcile any canceled or transferred certificates. Increasing visibility during your tender offer will help you establish value and prepare for future tender offers.

Our tender offer solution gives you the same flexible reporting and visibility that you are already used to in our equity plan management software. You'll see the real-time subscription status so you can review the number of participants who have subscribed and the value of those shares. You'll also be able to view canceled and transferred certificates and balances as they update at closing.

4. Consolidating Legal and Tax Documentation Makes Reporting Easier to Manage

One of the biggest challenges during a tender offer is communicating the regulatory necessities to participants, especially tax information, and ensuring that you document that your participants acknowledged the communication. Using an intuitive solution can ease the administrative burden of managing legal and tax documents.

Using Shareworks for your tender offer keeps all of the legal and tax documents in one place where you and your participants can access them. This includes consolidated 1099-B reporting, executed legal documents and post transaction statements. Our solution integrates participation documents within the liquidity workflow, allowing you to require participants to review and acknowledge documents, as well as populate transaction documentation for easy signature.

5. Foster Seamless Communication

A big part of a tender offer is communicating with employees, investors and others involved in the transaction. Items like timing, value, payments, taxes, etc. all require effective communication. You can make the process easier on yourself by using a system that is already familiar with your shareholders.

If you're already managing your equity plan on the Shareworks platform, it’s a comfortable and familiar experience for your shareholders when they participate in a tender offer. They can simply login using single sign-on and see everything relating to their shares, status and payment. There's no need to create new accounts and have your data go out of date on another system. Just have your participants log in to their existing Shareworks account, and you're off and running.

6. Pay Participants Quickly and Confidently

Once participants in your tender offer sell their shares, you'll want to have confidence that the money movement happens safely and correctly and that the distribution of payments is simplified. Payment processing is one of the most essential pieces of a tender offer, as it is the culmination of the transaction and a major focal point for all of the participants.

Managing payments quickly and confidently can be achieved by keeping your data in one place. If you use the same platform to manage both your equity plan and your secondaries, all your participant data is in one place, and the transactions can be seamlessly tied to their equity holdings. Through the Shareworks platform, you can efficiently distribute funds directly to shareholders involved in the tender offer. With Shareworks money movement, you'll be able to pay participants via ACH, wire or check, and the software will do the heavy lifting for you.

Thriving Employees Build Thriving Companies

Offering a buyback to your participants is a smart way to reward employees that contributed to the success of your company. Tender offers encourage retention and create cultures of ownership that the top private companies use to motivate employees and align their interests to the success of the company. But, there's one more piece to the puzzle to help your employees thrive…

After a tender offer, a pool of your participants is going to receive funds previously unavailable to them. What will they do with those funds? Buy a house, save for retirement, set up their child's college fund?

For many of your participants, a tender offer opens the door to their future where financial planning will become a more significant focus in their lives. Our partnership with Morgan Stanley allows us to bring financial education and financial wellness offerings to your participants, setting them up for success and helping them remove stress from financial decisions. These services are available if you feel your team would benefit from setting up a financial roadmap ahead of their tender offer transaction.

Shareworks makes managing tender offers easy. Learn how we can help you run a better tender offer. 

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THIS INFORMATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s) as Shareworks does not provide legal or tax advice and the information is not tailored to the specific situations of your company or your employees. Shareworks by Morgan Stanley services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley. CRC 3174357-08/20