Right of First Refusal (ROFR)

Definition

ROFR protects existing shareholders against unwanted new partners. Shareholder A wants to sell their 30% to a third party for €1.5m? They must first present that same offer (€1.5m, 30%) to existing shareholders B and C. Only if they decline within X days (typically 30) can A proceed with the external sale: and not on more favourable terms for the outside buyer.

In Benelux shareholder agreements ROFR is standard for family businesses and consolidated minority positions. It differs from a "right of first offer" (ROFO) where existing shareholders bid first before the market is approached: ROFR is reactive, ROFO is proactive.

When it matters

In any shareholder structure where new partners must be selective (family business, small advisor network, partner-led professional services). Avoid in growth businesses with VC investment: ROFR slows secondary sales and can depress investor value.

Frequently asked

What is the difference between ROFR and ROFO?

ROFR (Right of First Refusal) reacts to an existing external offer: current shareholders can match it. ROFO (Right of First Offer) comes first: the shareholder must elicit a bid from existing shareholders before approaching the market.

Does ROFR slow my sale?

Yes: typically 30-60 days before external sale is possible. Acceptable for strategic-buyer negotiations; problematic for competitive auctions.

Can I offer an external buyer a better price than ROFR?

No: you must first present the higher offer to ROFR holders. Otherwise you have breached the contract and the sale can in principle be voided.