Portfolio capital · secondary liquidity

Secondary Tender vs. IPO Horizon

Price a tender offer against the exit you are actually waiting for: after-tax cash today, discounted and probability-weighted proceeds at IPO, and the IPO price at which holding breaks even.

01The position

SharesStrike price$ / shareExercised cashlessly: netted out of the proceeds.Secondary offer$ / shareLast preferred round$ / shareUsed for the discount to the last marked price.

02The exit you are waiting for

Expected IPO price$ / shareMonths to liquiditymonthsInclude any post-IPO lockup.Probability of exit%A failed exit is modelled at $0, not at the tender price.Opportunity cost of capital% / yrWhat the cash would earn if you took it today.

03Tax profile

Ordinary income rate%Federal + state on option spread.Long-term capital gains rate%Federal + NIIT + state, blended.QSBS-qualified shares (§1202)Excludes gains up to the lesser of $10M or 10× basis, only after a 5-year hold.

Cashless exercise: the strike is netted from proceeds and the spread is taxed as ordinary income (NSO treatment; ISO/AMT is out of scope). A failed exit is $0 on the hold path. QSBS applies only to owned stock held five years, capped at the lesser of $10M or 10× basis. State tax is folded into the rates you enter; this is a deterministic model of the arithmetic, not tax advice.