Loading the player...

What does 'Tender' mean

To tender is to invite bids for a project, or to accept a formal offer such as a takeover bid. Tender usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. The term also refers to the process whereby shareholders submit their shares or securities in response to a takeover offer.


For projects or procurement, most institutions have a well-defined tender process, as well as processes to govern the opening, evaluation and final selection of the vendors. This ensures that the selection process is fair and transparent. In regards to tender offers related to takeover attempts, the conditions of the offer are also clearly listed, including the purchase price, number of shares requested, and a deadline for response.

Tender for a Contract

A tender can refer to an attempt by a business to land a particular contract that is requesting responses. Similar to a formal bid, a formal tender lists the conditions regarding how the company would meet the specified needs to the requesting organization, as well as information regarding the general operation and capabilities of the tendering company.

Issues related to costs of associated materials and labor, milestones or project goals, and timelines to complete specific portions of the work may be included within the response, providing an overview to the requesting organization regarding the responding business's intentions.

A tender is often considered more complex than a bid. A tender is often requested in response related to larger-scale projects or long-term commitments. With the additional complexity can come additional costs on the side of the business submitting a tender. Just like a bid, an offer may or may not be accepted by the requesting organization.

Tender Offer

A tender offer is a solicitation by an outside party that is attempting to acquire a controlling portion of a company's shares, resulting in a form of takeover that is considered to be hostile. Generally, the payment offered on the shares is over current market value, enticing shareholders to release the specified number of shares to the outside party by the specified deadline.

Since the deal targets shareholders directly, it effectively removes upper management from the process unless those members of management are also substantial shareholders. If the company looking to takeover already has a notable share of the target company, referred to as a foothold block, a minority of the remaining shareholders may be enough to allow the company making the offer to become the majority shareholder. However, if the number of shares requested are not released by the deadline, the deal is often considered void, effectively allowing shareholders to block the deal.