What is Right of First Offer (ROFO) vs ROFR?
Nexa Consultancy | Startup & Finance Glossary
A Right of First Refusal (ROFR) lets a holder match an offer from a third party. A Right of First Offer (ROFO) requires a selling shareholder to first offer the shares to the holder before seeking third-party offers. ROFR is generally more favorable to the holder.
Startup Example: An SHA has a ROFO clause. If a founder wants to sell their shares, they must first offer them to the other co-founders at a price they determine. If the co-founders refuse, the founder can then sell to a third party at that price or higher.
These clauses are critical components of a Shareholders' Agreement.