Analyzing a Tender Offer: Is It Time to Jump Into the Mix?

A tender offer is a type of offer that one individual makes in order to purchase a certain amount of shares in a corporation. It is basically a type of takeover technique that can be used in order to buy a certain amount of shares in a company. Many times, an investor will contact shareholders of a company in order to inquire about purchasing their shares in that company. Sometimes, they will use a very public medium to advertise that they are looking for shares. For example, they might take an ad out in a financial publication in order to attract investors to sell.

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Most of the time, in order to entice people to sell, the individual will offer to buy the shares at a higher price than what the shares are trading for the market. Sometimes, this procedure can increase the value of the stock in the market because of the possibility of a corporate takeover. The offers usually have limits on them, such as specified times and minimum and maximum amounts of purchases.

The SEC governs this type of activity. When a corporation makes a tender offer, they must be notified. 

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