Definition
The all-holders / best-price rule (Rule 14d-10 for third-party offers; analogous provisions in Rule 13e-4 for issuer offers) requires that:
- The tender offer must be open to all holders of the class of securities subject to the offer
- The consideration paid to any holder for tendered securities must be the highest consideration paid to any other holder during the offer
Why it matters
This is the bedrock equal-treatment principle in U.S. tender-offer regulation. It prevents a bidder from cutting side deals with large or strategic holders at premium prices while leaving retail shareholders with a lower offer.
Exception for compensatory arrangements
The 2006 SEC amendments clarified that bona fide compensation, severance, or employment arrangements with target executives that are negotiated in connection with the deal are not “consideration paid for tendered securities” — closing a long-standing source of best-price-rule litigation.
Practical posture
Any deviation from uniform per-share consideration is a litigation magnet. Bidder counsel scrubs every parallel agreement (executive compensation, retention bonuses, rollover equity) to confirm it doesn’t run afoul of the rule.