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What is Schedule TO?

Apr 18, 2022 | Corporate

Want to be a master of the universe and conduct a hostile takeover of that company you think you can run better than the corporate drones spending shareholder money?  

Do you think the company you are eyeing is better broken down and sold for parts?  

You need to think about a tender offer?  If you do, then you need to learn about Schedule TO.

Schedule TO is a Securities and Exchange Commission filing required when a party makes a tender offer that would result in over 5% ownership of a class of a company’s securities. The tender offer statement must disclose certain information to the SEC, the target company, and any exchanges on which the securities are listed. Tender offers are a common means of acquisition and subject to stringent SEC regulations.

What is a Tender Offer?

A tender offer is a public bid made by a company or an interested third party to buy some or all of the shares in a corporation from its stockholders. The bidder can make the offer directly to the security holders of the corporation. Although the specific term “tender offer” is not defined in any statutory provision, the SEC will consider various factors to determine whether a certain acquisition program constitutes a tender offer.

Tender offers are typically made at a premium — a price higher than the stock’s current price — providing the stockholders with a greater incentive to sell their shares. The offer must be accepted within a specific time frame. Either cash or securities can be offered, or a combination thereof. Once the shares in the tender offer have been bought, they become the property of the purchaser. The purchaser can either hold the shares or sell them.   

In a takeover attempt, the tender may be conditioned upon the buyer being able to purchase a certain number of shares in order to have a controlling interest in the corporation.

What Information Must Be Disclosed in Schedule TO?

Bidders are required to disclose critical details regarding the terms of the offer. A number of specific items must be addressed when a Schedule TO is filed, including the following:

  • Company information
  • Summary term sheet
  • The background and identity of the filing person
  • Terms of the transaction
  • Previous contacts, transactions, negotiations, and agreements
  • Purposes of the transaction and any plans or proposals
  • Source of funds and the amount
  • Interest in securities of the subject company
  • Persons/assets retained, compensated, employed, or used
  • Financial statements
  • Additional information
  • Exhibits
  • Information required by Schedule 13E-3 if going private through the tender offer

Many of the regulations imposed by the SEC are meant to provide crucial protection to the holders of the security. Critically, security holders have withdrawal rights allowing them to withdraw the tender of their securities within a specific time frame. A bidder is prohibited from giving one group of shareholders preferential treatment over another — they cannot offer different prices to security holders.

Advantages of a Tender Offer

A tender offer can come with several crucial advantages for investors. Investors are not obligated to purchase shares until a specific tender threshold is reached, potentially saving them from spending a considerable amount of cash upfront, and preventing the liquidation of stock if the offer falls through. When an offer is accepted, investors can obtain control of their target company. 

While tender offers come with numerous benefits, there are a few disadvantages that should be noted. A tender offer can be an expensive and time-consuming process. An investor will be required to wait for the depository bank to verify the shares that have been tendered before it issues payment. In the event of a hostile takeover, an investor may need to expend a substantial sum of money to complete the process.

Contact a Knowledgeable New York Business Attorney

Tender offers are complex and require the skill of an experienced business attorney. Brinen & Associates is committed to helping clients with a wide variety of corporate and securities matters and assisting them with ensuring SEC compliance. Call (212) 330-8151 or send us a message to learn more about our legal services.  


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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