Running or Responding to a Tender Offer: A Practical Guide

Document type: Guide Practice area: Corporate — Mergers and Acquisitions Jurisdiction: United States (federal securities law and Delaware) Last reviewed: 5 September 2026

Part one: running an offer

Stage 1 — Pre-commencement (three to six weeks)

Assemble the team. A tender offer requires more third parties than any other corporate transaction, and each has a lead time:

Confirm the financing. For a hostile bid, commitment letters must be signed and the offer should have no financing condition. For a negotiated deal, the merger agreement will require certain funds.

Run the regulatory analysis. Premerger notification and any sector or foreign investment approvals. Determine which are conditions and which are merely timing.

Determine the target's defenses. Rights plan and its trigger; classified board; business combination and control share statutes in the state of incorporation; advance notice bylaw and its deadline; ability of stockholders to call a special meeting or act by written consent; supermajority provisions in the charter.

Calendar the advance notice deadline immediately. It is typically ninety to one hundred twenty days before the anniversary of the prior annual meeting, and missing it costs a year.

Prepare the documents:

• Offer to Purchase — the disclosure document; the substantive core
• Letter of Transmittal — how holders tender
• Notice of Guaranteed Delivery
• Letters to brokers, dealers, and nominees
• Schedule TO with all exhibits
• Summary advertisement, if used
• Press release

Set information controls. Rule 14e-3 attaches on a substantial step toward the offer, and it does not require a breach of duty. Restrict trading, log who knows, and brief every adviser.

Stage 2 — Commencement

Commencement occurs on the date the offer is first published, sent, or given to holders. On that date:

• File the Schedule TO with all exhibits
• Disseminate the Offer to Purchase and Letter of Transmittal
• Issue the press release
• Deliver materials to the target and to any exchange on which the shares are listed

The offer must remain open at least twenty business days. Count carefully; business days exclude weekends and federal holidays, and the count runs from commencement.

Stage 3 — During the offer

Monitor tender levels daily through the depositary. Early tenders are rare; the great majority arrive in the final three days, which means the middle of the offer period is uninformative and should not drive decisions.

Amendments. Any material change requires an amendment to the Schedule TO, dissemination, and — depending on the change — additional time:

• Price or percentage sought changes: at least ten business days remaining
• Other material changes: generally five business days
• Waiver of a material condition: treat as material; build in time

Extensions. Announce by press release no later than 9:00 a.m. Eastern on the next business day after the scheduled expiration, stating the approximate number of shares tendered to date. Extensions are routine in hostile offers and common in friendly ones awaiting regulatory clearance.

Litigation. Expect a disclosure suit within days of the 14D-9. Have the process record assembled before commencement.

Stage 4 — Expiration and acceptance

• Confirm each condition is satisfied or validly waived
• Obtain the depositary's final tabulation
• Announce results by press release
• Accept for payment all validly tendered shares
• Pay promptly

If the minimum condition fails, the bidder may extend, waive or reduce the condition (with additional time), or terminate and return the shares.

Stage 5 — Subsequent offering period

Optional, three to twenty business days, at the same price, with immediate payment and no withdrawal rights. Useful for gathering additional shares toward a threshold. Announce it in the results press release.

Stage 6 — The back end

In a negotiated deal with a Section 251(h) provision: file the certificate of merger immediately after acceptance. No stockholder vote. The remaining shares convert into the right to receive the offer price.

Where 251(h) is unavailable: if the bidder holds 90% or more, use the short-form merger statute. Otherwise, a proxy statement and a stockholder vote — which the bidder will win, having a majority, but which takes two months.

Post-closing: file the final amendment to the Schedule TO reporting the results; delist and deregister the shares; and prepare for appraisal petitions, which must be filed within 120 days of the effective date.

Part two: responding to an offer

The first forty-eight hours

Convene the board. Not the full board initially — the chair, the CEO, the lead independent director, and counsel — to organize. Then a full meeting within a day or two.

Retain advisers. Financial adviser and outside counsel, engaged by the board or a committee, with conflicts checked against the bidder.

Issue a holding statement. Something like: "The Board of Directors will review the offer carefully and will advise stockholders of its position within ten business days, as required. Stockholders are urged to take no action at this time."

Say nothing more. Before the 14D-9 is filed, the target may not solicit or recommend acceptance or rejection. A director quoted calling the offer "an insult" has created a securities problem and given the bidder an argument.

Institute a litigation hold and preserve documents.

Assemble the defensive facts: rights plan status and trigger; charter and bylaw provisions; state statute applicability; advance notice deadline; the register and its composition; and the standstill status of any prior negotiations.

The ten-business-day clock

The Schedule 14D-9 is due within ten business days of commencement. That is not much time to run a substantive analysis, and it is why preparation before an offer arrives is valuable.

The board's decision. Four options: recommend acceptance, recommend rejection, remain neutral, or state it cannot take a position. Each requires reasons.

What the board should do before deciding:

• Receive a financial analysis of the offer against standalone value, alternatives, and the market
• Understand the offer's conditions and whether it is genuinely financed
• Consider whether a market check is feasible and advisable
• Consider the bidder's identity, its history, and its plans for the business
• Document its deliberations in minutes that record analysis, not attendance

Disclosure in the 14D-9 that generates litigation if omitted:

• The financial adviser's analyses, at a level allowing evaluation of assumptions
• The adviser's fees and relationships with the bidder
• Management projections relied upon
• Every arrangement between the target and its officers and directors relating to the offer — severance, retention, equity acceleration, indemnification
• Any discussions with the bidder or others, and their substance
• Whether the board is exploring alternatives

Defensive options

Do nothing but recommend rejection. Legitimate and common where the board believes the price is inadequate and the stockholders will agree.

Maintain or adopt a rights plan. If one exists, do not redeem. If none exists, the board can adopt one same-day; the governance criticism is real but the tool is available. Review under enhanced scrutiny: the board must show reasonable investigation of a threat and a proportionate response that is neither coercive nor preclusive.

Run a process. The most effective response to an inadequate offer is a better one. A board that solicits alternatives converts a hostile bid into an auction, which is where target stockholders do best.

Negotiate. Most hostile bids end in a negotiated transaction at a higher price. The board's leverage is the pill plus time; the bidder's leverage is the stockholders' interest in a premium.

Structural and operational responses. A recapitalization, a self-tender, a significant acquisition or divestiture, or a strategic transaction with a third party. Each is reviewable under enhanced scrutiny and each must be justified by something other than entrenchment.

What is no longer available. Discriminatory self-tenders excluding the bidder are prohibited by the all holders rule. Lock-ups and deal protections that preclude a competing bid are vulnerable. And a board that simply refuses to engage, without analysis or advice, is not protected.

The proxy contest dimension

A determined bidder will nominate directors. The target should:

• Confirm the advance notice bylaw is clearly drafted and was properly adopted, and apply it consistently
• Assess the register: index funds, active institutions, retail, and any activist positions
• Engage stockholders early, before the bidder does
• Understand proxy advisory firm policies, which materially affect outcomes and generally disfavor entrenchment
• Prepare for a universal proxy card, which allows stockholders to mix nominees and has changed contest dynamics

Part three: the negotiated two-step

Most tender offers today are friendly. The structure is chosen for speed.

The merger agreement provisions that matter

• An express Section 251(h) provision. Without it, the structure does not work.
• A minimum condition at least equal to the percentage needed to adopt the merger, defined precisely on a fully diluted basis with stated treatment of options and other convertible securities.
• Obligation to commence the offer within a stated number of business days after signing.
• Extension mechanics — when the bidder must extend, when it may, and the outside date.
• Conditions mirroring a one-step merger agreement, including the MAE definition with its carve-outs.
• Board recommendation and the circumstances in which it may change, with a matching right for the bidder.
• Top-up option, where the target is not a Delaware corporation or 251(h) is otherwise unavailable.
• Treatment of equity awards at the effective time.
• A structure-switch provision permitting conversion to a one-step merger if circumstances change.

The friendly timetable

Total: roughly five weeks from signing, assuming no regulatory delay. Where clearance takes longer, the offer is extended and the advantage evaporates — which is the main reason to prefer a one-step merger where a lengthy review is expected.

Practical friction in the friendly deal

• The 14D-9 and Schedule TO must be filed the same day the offer commences. Both take time; start both at signing.
• Equity award treatment requires the target's plan administrator, and the mechanics of cashing out options and restricted stock units at closing are fiddly. Start early.
• The depositary's final tabulation takes hours, not minutes. Build it into the closing schedule.
• Guaranteed delivery shares do not count toward the minimum condition unless actually delivered; understand the treatment before relying on tender levels.
• Section 16 filings for the target's insiders are due promptly on disposition.

The offer documents in detail

The Offer to Purchase is the substantive disclosure document, and its quality determines both the litigation exposure and, to a degree, the tender rate. Institutional holders read it; retail holders read the summary term sheet.

Summary term sheet. Required, and it is the most-read part of the document. It must be in plain English, in bullet form, and it must fairly present the offer including its conditions. Do not use it to advocate; a summary that oversells and understates conditions is the first thing a plaintiff quotes.

Introduction and terms. Price, shares sought, expiration, proration, withdrawal, and the conditions in summary.

Background of the offer. Every contact between the bidder and the target relating to a possible transaction, with dates. In a hostile bid this section is a narrative both sides will contest, and the bidder should draft it as a factual chronology rather than an argument. Omissions here are the most common disclosure claim against a bidder.

Purpose, plans, and proposals. What the bidder intends: the back-end merger, board changes, delisting and deregistration, changes to the business, sales of assets, changes in dividend policy or capitalization. State intentions honestly. A bidder that says it has no present plans and then executes a plan it was developing has an enforcement problem, not merely a litigation risk.

Source and amount of funds. The full financing structure, the commitment letters and their conditions, and any alternative financing. If the offer has no financing condition, say so prominently — it is the bidder's strongest credibility point.

Certain information concerning the target. Historical financial information, market prices, and dividends. In a hostile bid this is drawn from public filings, and the bidder must disclaim responsibility appropriately.

Certain information concerning the bidder. Identity, organization, controlling persons, financial information where material — which it is where the consideration is securities or where the bidder's ability to pay is relevant.

Interest in securities of the target. Holdings and every transaction in the prior sixty days, by the bidder and its directors and officers.

Conditions of the offer. Drafted with care; see the discussion of conditions in the companion article. Each must be objectively determinable.

Legal matters and regulatory approvals. Antitrust, sector approvals, foreign clearances, state takeover statutes, and appraisal rights.

Fees and expenses. The dealer-manager, information agent, depositary, and solicitation arrangements.

The Letter of Transmittal

The operative instrument by which a holder tenders. It contains the representations the holder makes — that it owns the shares free of liens, that it has full authority, and that it agrees to the terms — and the tax certifications required for payment. Its mechanics matter: guaranteed delivery procedures, book-entry transfer through the depository system, signature guarantees by eligible institutions, and the treatment of partial tenders.

A practical note. The overwhelming majority of shares tender through book-entry transfer by the holder's broker, and the individual holder never sees the letter. The document nonetheless has to be right, because it is the contract, and the depositary will apply it literally.

Managing the information agent and the tender rate

Tender rates are not automatic, and a bidder that assumes shares will arrive is often surprised.

How tendering actually works. Institutional holders instruct their custodians, who deliver through the depository system. Retail holders instruct their brokers. In both cases, an intermediary must act, and intermediaries act on deadlines rather than in advance. Expect 5–15% of the eventual total in the first fifteen business days and the balance in the last three.

What the information agent does. Mails materials to record holders and, through the nominee chain, to beneficial owners; maintains a call center for holder questions; runs outbound calling campaigns to large holders and to brokers; and provides daily tender reports.

What moves the rate.

• The record date and the nominee chain. Materials must reach beneficial owners, which requires the nominees to forward them. Confirm distribution volumes early.
• Broker outreach. Retail shares tender when brokers push them. This is the information agent's core value.
• Arbitrage participation. After announcement, a substantial portion of the register turns over to event-driven funds who will tender reliably. This is why tender rates in friendly deals are usually high.
• The minimum condition's visibility. Holders who believe the offer will fail may not bother tendering, which can be self-fulfilling. Bidders manage this by reporting tender levels in extension announcements.

A target-side note. A target recommending rejection should expect the bidder to run an aggressive solicitation, and should consider its own outreach — not to solicit against the offer beyond what the 14D-9 permits, but to ensure holders understand the board's reasoning.

Board process for the target: a template

The 14D-9 must state reasons, and enhanced scrutiny requires a record. The following sequence produces both.

Meeting one — organization. Confirm the offer's terms. Retain advisers, with conflicts disclosed. Establish a meeting cadence. Consider whether a committee is appropriate — usually not necessary absent a conflict, but appropriate where management has arrangements with the bidder or a rollover.

Meeting two — information. Management presents the standalone plan and its assumptions. The financial adviser presents preliminary analyses: the offer against DCF, trading comparables, transaction comparables, premiums paid, and analyst targets. Counsel presents the legal framework, the defensive landscape, and the disclosure obligations.

Meeting three — alternatives. Consider whether to solicit alternatives, contact specific parties, or negotiate with the bidder. Discuss whether a market check is feasible given the bidder's stance and the company's circumstances. Record the reasoning either way — a decision not to run a process is defensible; a failure to consider one is not.

Meeting four — decision. The adviser delivers its view. The board deliberates and votes on the recommendation. Counsel reviews the draft 14D-9, including the conflicts disclosure. Directors confirm their own arrangements have been disclosed.

Throughout. Minutes that record the substance of the analysis and any dissent. Materials retained. No director communicating with the bidder or the press outside the agreed channel.

Worked timetables

Hostile bid, from first contact to resolution

Friendly two-step

As set out above: signing to closing in about twenty-three business days.

A worked case: the Ravenscroft offer, from the target's chair

The situation. Ravenscroft Partners commences an unsolicited all-cash offer for Molyneux Analytical at $61.00 per share, a 34% premium. Molyneux's board chair is Ingrid Boateng, a former operating executive with no ties to management. The board has nine members, seven independent, elected annually. There is a rights plan with a 15% trigger. Ravenscroft holds 6.2%.

Hour one. Boateng convenes the lead independent director, the CEO, and general counsel. They agree three things: retain advisers today; issue a holding statement; and instruct every director and officer that all communications route through counsel. The general counsel issues a litigation hold within two hours.

Day one. The holding statement goes out: the board will review and respond within ten business days; stockholders should take no action. A director who had already told a reporter the offer was "opportunistic" is a problem, and counsel addresses it by including the statement in the 14D-9 and correcting the record — better to own it than to be confronted with it.

Day two. The board retains a financial adviser. The adviser discloses that it advised Ravenscroft on an unrelated financing two years ago and earned $4 million. The board considers whether to retain someone else. It decides to proceed, documents the disclosure and its reasoning, requires a fee structure not contingent on any outcome, and discloses the relationship in the 14D-9. This is the right handling: the conflict is disclosed, considered, and priced.

Days three to six. Management presents its standalone plan, which projects a step-change in earnings from a product launching in eighteen months. The adviser's DCF, using that plan, produces a range of $66 to $81. The board asks the question that matters: how confident is management in the launch? The answer — regulatory submission filed, approval expected but not certain — determines whether the standalone case is real or aspirational, and it becomes the center of the 14D-9's reasoning.

Day seven. The board considers alternatives. Ravenscroft is the natural strategic buyer; two others are plausible but would face antitrust review. The adviser contacts both quietly. Neither will move before the regulatory outcome on the new product.

Day nine. The board resolves to recommend rejection, on the ground that the offer does not reflect the value of the pending product approval, and to maintain the rights plan. It also resolves to re-engage if Ravenscroft raises materially or if the approval issues.

Day ten. The 14D-9 is filed. It discloses: the adviser's analyses and the projections underlying them, including the launch assumptions and their uncertainty; the adviser's prior work for Ravenscroft and its fees; the change-of-control severance payable to five executives, in tabular form; the contacts with two potential alternative bidders, without naming them; and the director's press comment.

Month four. The product is approved. The stock trades to $68 on its own. Ravenscroft raises to $76.50. The board, now negotiating from a position of demonstrated value, obtains $79.00 and signs.

What worked. The board asked a substantive question rather than a procedural one, and built its recommendation on the answer. It disclosed the awkward facts — the adviser's conflict, the director's comment, the executives' severance — rather than being caught omitting them. And it left the door open, which converted a "no" into a negotiation.

What would have gone wrong. Had the board rejected on generic "inadequate value" grounds without articulating the launch thesis, the 14D-9 would have been vulnerable and the board's Unocal position weaker. Had it concealed the adviser's prior Ravenscroft work, that omission would have become the plaintiffs' entire case.

Common errors

Bidder side.

• Missing the advance notice deadline, which forfeits a year of leverage
• Commencing without committed financing
• Inconsistency between an early Schedule 13D "investment purpose" and a later control bid
• Underestimating third-party lead times, particularly the depositary and information agent
• Failing to restrict trading once a substantial step has been taken
• Drafting a minimum condition that is ambiguous on a fully diluted basis
• Waiving a material condition without allowing the required additional time

Target side.

• Speaking substantively before the 14D-9 is filed
• Omitting officers' and directors' compensation arrangements from the 14D-9
• Adopting or maintaining a pill without a documented analysis of the threat
• Failing to consider alternatives, which undermines the board's position under enhanced scrutiny
• Applying the advance notice bylaw inconsistently or opportunistically
• Treating the ten-business-day clock as a target rather than a deadline

Preparing before an offer arrives

The ten-business-day clock is unforgiving, and the companies that respond well are the ones that prepared when nothing was happening. An annual preparedness exercise costs a few days of counsel time and is worth far more.

Maintain a current defense profile. A short memorandum, refreshed annually, stating: the charter and bylaw provisions relevant to a takeover; whether the board is classified; whether stockholders may call a special meeting or act by written consent; supermajority requirements; the advance notice deadline computed for the coming year; the applicability of state business combination and control share statutes; the status of any rights plan; and change-of-control provisions in material contracts, credit agreements, and compensation arrangements.

Keep a rights plan on the shelf. A board-approved form that can be adopted in a single meeting, together with the resolutions and the press release. Adopting a plan preemptively invites governance criticism and proxy advisory opposition; having one ready costs nothing.

Know the register. Understand who holds the stock, how concentrated it is, and which holders are event-driven. Update quarterly. A board that learns its ownership profile during a bid is already behind.

Identify the advisers now. Pre-clear a financial adviser and outside counsel for conflicts, so that retention on day one is a phone call rather than a week of clearance. Identify a proxy solicitor and an information agent.

Run a rehearsal. A half-day exercise in which the board works through a hypothetical offer: the holding statement, the adviser retention, the analysis, the decision, and the disclosure. Directors who have done this once respond markedly better.

Fix the communications protocol. Every director and officer should know, in advance, that all inbound contact from a potential bidder, an analyst, or a reporter routes to a single named person. The most damaging things said during a takeover are said in the first two days by people who did not know the rules.

Review the compensation arrangements. Change-of-control provisions will be disclosed in tabular form and will be criticized. Better to review and, if necessary, adjust them in a quiet period than to defend them during a bid.

Confirm the bylaws are clean. Advance notice provisions that are ambiguous, or that were adopted without clear authority, are litigated. A bylaw review by counsel who did not draft them is worth doing.

Extensions, amendments, and the endgame

The last two weeks of a contested offer generate most of the procedural mistakes, because decisions are made under time pressure with incomplete tender information.

Extension mechanics. An extension must be announced by press release no later than 9:00 a.m. Eastern on the next business day after the previously scheduled expiration, and the announcement must state the approximate number of shares tendered to date. Missing the deadline means the offer has expired, which is not a recoverable error. Assign the announcement to a named person with a backup, and draft it in advance.

Amendments requiring additional time. A change in price or in the percentage sought requires that at least ten business days remain. Other material changes generally require five. Waiver of a material condition should be treated as material. The practical consequence: a bidder that wants to raise its price near expiration must plan two weeks ahead, and a bidder that discovers a need to waive a condition on the final day has a problem.

Reducing or waiving the minimum condition. Sometimes the right move — a bidder that has 44% and needs a majority may prefer to take 44% and continue the campaign. But reducing the minimum condition is a material change requiring additional time, and it signals weakness. Consider instead a subsequent offering period after satisfying a lower threshold, if the structure permits.

The final tabulation. The depositary computes validly tendered shares, excluding shares tendered by guaranteed delivery that were not actually delivered and shares with defective documentation. Guaranteed delivery shares routinely fail to arrive, and a bidder counting them toward its minimum condition can find itself short. Ask the depositary for the breakdown, not just the total.

Acceptance and payment. Once conditions are satisfied and the offer expires, the bidder must accept and pay promptly. In a Section 251(h) deal, the certificate of merger is filed the same day, and the mechanics — the certificate, the effective time, the conversion of remaining shares, the treatment of equity awards, the funding of the paying agent — should be rehearsed with the depositary and the transfer agent in advance.

Post-closing filings. The final amendment to the Schedule TO reporting results; Section 16 filings for insiders; delisting notification to the exchange; and deregistration once the holder count permits. Each has its own deadline and each is routinely late.

Working with the regulators

Two regulatory relationships run alongside every tender offer, and both reward early engagement.

The Commission's staff. The Office of Mergers and Acquisitions reviews tender offer filings and comments on them. In a contested offer, comments arrive quickly and can be pointed — most often on the adequacy of the background section, the clarity of the conditions, the summary term sheet's fairness, and, on the target's side, the completeness of conflicts disclosure. Comments in a tender offer are urgent by nature, because the offer is running. Assign someone to monitor the filing desk and respond within days rather than weeks.

The staff also administers the exemptive and interpretive relief that cross-border offers frequently require. Where a structure needs relief — a separate US and non-US offer, an unusual payment timetable, an accommodation for a foreign squeeze-out regime — start the conversation before commencement, because relief obtained after the offer is running is worth much less.

The competition agencies. The premerger notification filing starts a waiting period, and in a hostile offer the bidder files unilaterally while the target may file later. The agencies' review runs on its own timetable and is indifferent to the offer's expiration, which is why the offer will be extended. Where a second request is likely, the bidder should decide before commencing whether it is prepared to run a months-long review while keeping an offer open, and the target should understand that a lengthy review is a defensive asset — it gives the board time.

A tactical point for targets. Antitrust arguments made to an agency are made in a proceeding the target does not control, and a target that overstates competitive overlap to slow a bid may find the same characterization used against it in its own future transactions. Advocate accurately.

Special situations

The target with a controlling stockholder. A tender offer cannot succeed without the controller's participation, which means the transaction is really a negotiation with one holder. The Williams Act framework still applies to the mechanics, but the dynamics are those of a negotiated sale, and the minority's protection comes from the fiduciary framework rather than from the tender decision.

The target in financial distress. Speed matters more, and the minimum condition may need to be lower because distressed registers are fragmented. Consider whether a transaction under bankruptcy court supervision is preferable, and whether the offer's conditions can survive a covenant default at the target.

Partial offers. An offer for less than all shares triggers proration and leaves the bidder with a control position and a public minority — an outcome that carries continuing fiduciary obligations and a likely future going-private transaction. These are rare in the United States and should be structured deliberately rather than by accident.

Competing offers. Where a second bidder emerges, the target's board's obligations shift toward obtaining the best transaction reasonably available, and deal protections in any signed agreement come under scrutiny. Each bidder must comply with the Williams Act independently, and the target must update its 14D-9 as its recommendation changes. Expect compressed timelines and simultaneous litigation.

The offer that fails. A bidder whose minimum condition is not satisfied returns the tendered shares and must decide whether to continue. Options: extend and continue soliciting; reduce the minimum; convert to a proxy campaign only; accumulate in the market up to the pill trigger; or withdraw. Each has consequences for the bidder's credibility in future bids, which is a real asset for a serial acquirer.

Quick reference: the deadlines that cannot be missed

The two most commonly missed are the advance notice deadline, which a bidder forfeits by treating the tender offer as the whole campaign, and the 9:00 a.m. extension announcement, which is missed because nobody was assigned to it. Both are calendar problems, not legal ones, and both are avoidable with a named owner and a backup.

Related documents

• Tender offers and the Williams Act: Schedule TO, the 14D-9, and the rules that govern a bid
• Tender offer compliance checklist
• Tender offer toolkit: offer documents, recommendation statements, and conditions
• Responding to an activist campaign: a practical guide
• Proxy contest toolkit: advance notice bylaws, response plans, and solicitation materials
• Activism preparedness checklist