Financial Planning
Tender Offer Proration: Calculate the Shares You Can Sell
Apply a supplied eligibility cap and acceptance rate, then reconcile shares requested, sold and retained in an employee tender example.
What you will learn
- Separate a request from an eligibility cap and an accepted quantity.
- Reconcile retained shares and stated transaction fees.
- Prepare the offer terms needed before doing the arithmetic.
Calculate tender-offer proration in the order the offer specifies: establish the eligible quantity, apply the stated acceptance rule, then calculate proceeds from accepted shares. A submitted request is not confirmation that every share will be purchased.
Get the rules before entering the numbers
Investor.gov’s tender-offer explanation emphasizes defined offer terms and conditions. Those terms, not a generic calculator, establish eligible holders, eligible securities, caps, acceptance and payment. Private shares can also have separate resale restrictions.
For this exercise, assume the offer administrator has already supplied the cap and acceptance rate. We are checking the resulting arithmetic, not deciding who may participate or whether to tender. Actual offers can use more complicated priorities, rounding or allocation methods.
Work the request, cap and acceptance separately
Fictional inputs: A holder has 6,000 eligible issued shares. The offer permits submitting up to 40% of that holding. The holder requests 3,000 shares. For the exercise only, all capped eligible submissions receive 75% acceptance. The price is $12 per accepted share and the stated fee is $100.
Original proration worksheet
| Step | Calculation | Result |
|---|---|---|
| Requested quantity | Holder request | 3,000 shares |
| Offer cap | 6,000 x 40% | 2,400 shares |
| Submission used for allocation | Lower of request and cap | 2,400 shares |
| Accepted quantity | 2,400 x 75% | 1,800 shares |
| Gross proceeds | 1,800 x $12 | $21,600 |
| After stated fee, before taxes | $21,600 - $100 | $21,500 |
Applying 75% directly to the original request would produce 2,250 shares and overstate this exercise’s accepted quantity by 450. The cap has to be applied first because that is the supplied rule.
Reconcile what the holder still owns
Retained shares are 6,000 - 1,800 = 4,200. They include 3,600 shares outside the submission cap and 600 capped shares not accepted. “Not accepted” is different from “cancelled” or “forfeited.” Do not remove those shares from the holding unless a separate documented event requires it.
Keep a transaction confirmation beside the initial request. If the final acceptance differs from the provisional percentage, replace the scenario with the confirmed quantity and retain the earlier calculation as a labeled estimate.
Complete the offer-input checklist
- Which holder and share class are eligible, and at what cutoff?
- Does the cap apply to vested awards, issued shares, a specific lot or another defined base?
- What exact priority and proration method applies if demand is too high?
- How are fractional results rounded, and where is that rule written?
- Which fees, deductions, payment conditions and settlement dates are confirmed?
The cap-table review checklist covers the wider company record. This worksheet covers the specific requested-to-accepted share movement.
Practice a lower acceptance rate
Use the same inputs but replace the fictional acceptance rate with 50%. Keep the cap, price and fee unchanged. Calculate accepted shares, retained shares and proceeds before taxes.
Answer: 2,400 x 50% = 1,200 accepted shares. The holder retains 4,800. Gross proceeds are $14,400, and proceeds after the stated $100 fee are $14,300. These are scenario amounts, not an offer or payout forecast.
Keep the final receipt with the reasoning
A useful completed record shows the source for every limit, the final accepted quantity and a share balance that reconciles. Leave unknown taxes and restrictions as questions for the appropriate professional rather than silently assuming zero.
Organize the approved offer summary and questions in Finta Documents. Keep the administrator’s answer, the responsible person and the next follow-up together without treating Finta as the offer administrator or broker.
General education with fictional examples, not individualized legal, tax, valuation or investment advice. Have the appropriate professional review decisions affecting actual awards or transactions.