Is ROFO or ROFR more favorable to the company?

ROFO is typically more favorable. It gives existing investors first option without forcing the company to shop the deal externally first. ROFR forces external marketing before the rights kick in.

Can both ROFO and ROFR be in the same agreement?

Yes, but on different types of transactions. For example, ROFO on new issuances, ROFR on shareholder transfers. Combining them on the same transaction is rare and creates ambiguity.

How long is a typical ROFO response period?

15-30 days. Long enough for the rights holder to evaluate seriously, short enough not to stall the transaction.

Governance & rights

Right of first offer (ROFO)

Right to receive an offer before the company offers shares to third parties.

Definition

A right of first offer (ROFO) requires a selling shareholder, or the company itself in a new issuance, to first offer the shares to the ROFO holder at agreed terms. Only if the ROFO holder declines can the seller go to a third party — and the third-party deal must be on terms at least as favorable.

Same concept, different names

Universal	Contractual; in shareholders agreement or rights agreement

ROFO vs ROFR (right of first refusal)

The two rights are often confused but operate differently:

ROFR: seller finds a third-party buyer first, then offers the same terms to the rights holder. The rights holder can match the offer
ROFO: seller offers to the rights holder first. Only if the rights holder declines can the seller approach third parties, and the third-party terms must be at least as favorable to the seller as what was offered to the ROFO holder

When ROFO is preferable

ROFR is more common for share transfers between shareholders. ROFO is more common for new issuances by the company, where it gives existing investors first option to take new shares before outsiders are approached. From the seller's perspective, ROFR is friendlier (you can shop first); from the rights holder's perspective, ROFO is friendlier (you set the price).

In Octelligence

Transfer restrictions tracked at the share level.

Octelligence flags ROFO and ROFR holders for each share class. When a transfer or issuance is initiated, the platform prompts for the required offers and tracks the period.

View digital corporate records

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Cap table, registers, certificates

Track every investor right at the share level.

Pro-rata, ROFR, drag-along, MFN, registration rights. Recorded against the share, surfaced when relevant.

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Right of first offer (ROFO)

ROFO vs ROFR (right of first refusal)

When ROFO is preferable

Related terms