ROFR and Co-Sale Rights
Definition
A right of first refusal lets the company or existing investors match a proposed share sale. Co-sale rights let certain holders participate in a sale alongside the selling shareholder.
Why it matters
ROFR and co-sale rights can delay, reprice, or block pre-IPO secondary trades. They are central to whether a private-share transaction can actually settle.
Technical details
How ROFR affects buyers
ROFR can allow the company or investors to intercept a secondary sale.
Co-sale rights can reduce the amount a buyer receives from the original seller.
Marketplace bids are not final until transfer approvals clear.
A buyer may negotiate a price with an employee seller, only for the company or an existing investor to exercise its matching right.
What to verify
Review company bylaws, investor rights agreements, transfer notices, approval timelines, and whether the marketplace or broker has experience settling that issuer's shares.