What is the primary purpose of a tender offer?

The primary purpose of a tender offer is to purchase shares from shareholders. In a tender offer, a company or an individual offers to buy back a specific number of shares from existing shareholders at a predetermined price, typically at a premium over the current market price. This process is often used by companies looking to consolidate ownership, acquire a controlling stake, or improve their financial structure by reducing the number of outstanding shares.

The tender offer is a strategic move that enables the buyer to obtain equity directly from shareholders, distinguishing it from other financial activities such as selling additional shares or issuing new bonds, which serve different financial purposes. Evaluating company performance, while important, does not align with the specific transactional nature of a tender offer, which focuses on buying out shares rather than assessing financial metrics.