---
title: "What Is ROFR/Co-Sale Agreement?"
term: "ROFR/Co-Sale Agreement"
description: "A ROFR/co-sale agreement is the standard VC contract combining right of first refusal, company approval of transfers, and co-sale (tag-along) rights when shareholders sell stock."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/rofr-co-sale-agreement
---

# What Is ROFR/Co-Sale Agreement?

> A ROFR/co-sale agreement is the standard VC contract combining right of first refusal, company approval of transfers, and co-sale (tag-along) rights when shareholders sell stock.

**ROFR/co-sale agreement** is the investors' rights document that bundles transfer restrictions: right of first refusal, company consent, and co-sale (tag-along) when insiders sell shares.

### How it works

When a founder receives a third-party bid for common stock, the agreement typically requires:

1. **Notice** to company and major investors with full terms.
2. **[ROFR](/glossary/rofr)** — company and/or investors may purchase on the same terms within a set window.
3. **Co-sale** — if ROFR is waived or not fully exercised, investors may sell a pro rata portion of their shares in the same transaction.

Company **right of first refusal** often sits before investor ROFR in the waterfall. Board approval may be required for any transfer. Exceptions cover estate planning, affiliates, and approved tender offers.

These mechanics appear in the **Investors' Rights Agreement** alongside information rights and registration rights.

### Why it matters

- **Founders:** Plan months ahead for secondary liquidity; waivers are negotiable in tender programs but not ad hoc sales.
- **Investors:** Standard control package — ensures cap table quality and optional participation in insider exits.

### Common mistake

Assuming a friendly buyer can close quickly without running the full ROFR/co-sale sequence. Skipping steps can void the transfer and expose buyers to rescission risk.

### Related ideas

See also [ROFR](/glossary/rofr), [ROFO](/glossary/rofo), [drag along](/glossary/drag-along), and [cap table](/glossary/cap-table).

## FAQ

### What is a ROFR/co-sale agreement in simple terms?

It is the document that says the company and major investors get first chance to buy shares you want to sell (ROFR), and can sell alongside you if you find an outside buyer (co-sale). It also lists who must approve transfers.

### Why does ROFR/co-sale agreement matter?

For founders, it controls secondary liquidity timing and buyer choice. For investors, it prevents unknown shareholders on the cap table and protects pro rata in founder liquidity events.


---
Source: https://venturecapitaltracker.com/glossary/rofr-co-sale-agreement