---
title: "What Is Right of First Offer (ROFO)?"
term: "Right of First Offer (ROFO)"
description: "A right of first offer (ROFO) gives a party the chance to buy shares on the same terms a seller intends to offer a third party — usually before the seller shops the deal widely."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["deal-terms"]
source: https://venturecapitaltracker.com/glossary/rofo
---

# What Is Right of First Offer (ROFO)?

> A right of first offer (ROFO) gives a party the chance to buy shares on the same terms a seller intends to offer a third party — usually before the seller shops the deal widely.

**Right of first offer (ROFO)** is a contractual right to purchase shares on proposed terms before the seller solicits or accepts an offer from others.

### How it works

Founder wants to sell 500K common shares. ROFO requires notice to the company or major investors: "I intend to sell at $4.00/share to an outside party." ROFO holders have a window (often 15–30 days) to buy on those terms.

If they pass, the seller may proceed with the third party — sometimes subject to price floors or ROFR on the final binding offer.

ROFO is **softer** than [ROFR](/glossary/rofr): ROFO lets the seller set initial terms; ROFR typically lets the holder match a third-party bid after terms are known. Documents often combine both in [investors' rights agreements](/glossary/rofr-co-sale-agreement).

Secondary programs and tender offers negotiate ROFO waivers so employees can sell without sequential insider processes.

### Why it matters

- **Founders:** ROFO can slow personal liquidity; plan timelines before signing employment and shareholder agreements.
- **Investors:** ROFO protects against surprise cap table entrants and helps funds manage pro rata in insider sales.

### Common mistake

Confusing ROFO with ROFR. ROFO runs earlier in the process; ROFR matches a finalized outside offer — sequencing and deadlines differ materially.

### Related ideas

See also [ROFR](/glossary/rofr), [ROFR/co-sale agreement](/glossary/rofr-co-sale-agreement), [drag along](/glossary/drag-along), and [secondary sale](/glossary/secondary-sale).

## FAQ

### What is ROFO in simple terms?

ROFO means if someone wants to sell shares, they must offer them first to the ROFO holder on terms they plan to give an outside buyer — often at a price the seller sets before finding that buyer. It is usually softer than a full right of first refusal.

### Why does ROFO matter?

For founders planning secondary sales, ROFO can delay or limit buyer choice. For investors, ROFO preserves optional allocation in insider-led secondaries without forcing a match on every external term sheet.


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Source: https://venturecapitaltracker.com/glossary/rofo