A tender offer is when a company (or a group of investors organised by the company) offers to buy back employee shares at a set price. SpaceX, Stripe, and most established unicorns run them periodically. They're the most common liquidity event for late-stage private employees.
How tender proceeds are taxed
It depends on what you're tendering:
- Previously-exercised shares held >1 year after exercise and >2 years after grant: long-term capital gains (up to 23.8% federal).
- Previously-exercised shares held <1 year: short-term capital gains, taxed as ordinary income.
- Unexercised NSOs in a cashless tender: spread is ordinary income.
- Unexercised ISOs in a cashless tender: 'disqualifying disposition' — entire spread is ordinary income, no LTCG benefit.
- RSUs / PPUs tendered: distribution is ordinary income at the time of payout.
Strategy
If you have ISOs and you know a tender is coming in 12+ months, exercising now starts the 1-year LTCG clock. The pre-exercise tax cost is AMT exposure. Run the trade-off math: AMT today versus saving 13.8% (ordinary − LTCG) on the eventual gain.
SpaceX runs tenders roughly every 6 months. If you joined in early 2024 and have ISOs vested today, exercising in Q1 2025 positions you for LTCG treatment in the second half of 2026 tenders — assuming you can absorb the AMT now.