The ROFR and company approval: what happens after you find a buyer

What a ROFR actually is

A right of first refusal is a clause — in the company’s bylaws, your stock agreement, or both — that says: before your shares go to an outside buyer, the company may buy them itself, at the price and terms your buyer agreed. It exists so the company controls who sits on its cap table, not to set your price. The price was set earlier, by your buyer, in a real negotiation. The ROFR only decides who pays it.

The clock, start to finish

Once terms are agreed, a transfer notice goes to the company naming the shares, the price and the proposed buyer. That notice opens the window — commonly around 30 days, set by the documents — in which the company decides. During the window the trade waits; there is no honest way to hurry a company that holds a contractual right to think. The window is the long pole in most private sales, and it is entirely outside your control. The practical response is to plan for it: agree with your buyer up front that the deal survives the window, and keep the documents ready so the close follows the waiver by days, not weeks.

The three ways a window ends

The company waives

The most common outcome. The company declines to buy, the waiver (or the window lapsing, where the documents treat silence as waiver) clears the path, and your buyer closes at the agreed price. The window was a delay, nothing more.

The company — or its assignee — exercises

The company steps in and buys your shares at the price your buyer negotiated, on substantially the same terms. Many ROFRs let the company assign the right, so the actual buyer may be an existing investor the company prefers. Either way you sell, at that price, on roughly that timeline. Sellers hear "the company took it" as a loss; it is a close. The buyer you found did the price discovery; the company paid the bill.

The window lapses in silence

What silence means is written in the documents: most treat a lapsed window as a deemed waiver and the transfer proceeds; some require an affirmative company action no matter what, which turns silence into a block. This is the clause to read before the notice goes in — a desk that has traded the name usually knows which kind the company is.

Board approval is a different gate

Many companies pair the ROFR with a second, separate requirement: the board (or the company) must consent to the transfer at all. A company can waive its ROFR and still withhold consent — different clause, different decision, different calendar. Board approval runs on the board’s own schedule, which is one more reason the transferability check happens before anyone talks price: a sale that needs a consent the company has never granted is not a sale, whatever the quote says.

When the answer is simply no

Some companies prohibit transfers outright, outside windows they run themselves. If that is your company, no amount of negotiating with buyers changes it. The real routes left are a company tender when one opens, a forward agreement where the documents permit one — read that contract against the company’s documents, because some companies treat forwards as transfers — or waiting. A desk that has traded the name, or tried to, usually knows which kind of company it is before your notice teaches you the expensive way.

What a seller can actually do

Three things, all before the notice goes in. Read the documents — or have someone read them — so the window length, the silence rule and any consent requirement are facts, not surprises. Shop a clean file: a notice with exact share counts, clean title and a credible buyer gets waived faster than one the company’s counsel has to untangle. And run the process with paper the company has seen before — a desk that has closed in the name arrives with documents company counsel recognizes, which is often the difference between a window that lapses quietly and one that turns into a correspondence. This desk checks transferability first on every file; tell us the company and what you hold, and the answer usually comes back with the indicative range, within a business day. There is no fee to ask.

Common questions

Does a ROFR mean I get a lower price?

No — the opposite of what most sellers assume. The ROFR is exercised at the price your buyer negotiated, so your price is set by real competition before the company sees the notice. What a ROFR does cost you is time (the window, commonly around 30 days) and, occasionally, a buyer who walks rather than wait. It does not cost you price.

How long is a ROFR window?

Commonly around 30 days from the transfer notice, but it is set by the company’s documents — some run two weeks, some sixty days, and some stack a company window and an investor window back to back. The window for your company is a fact, not an estimate; it is in the bylaws or the stock agreement.

Can the company assign its ROFR to someone else?

Often, yes. Many ROFRs are written so the company can designate an assignee — typically an existing investor — to buy in its place. From your side nothing changes: same price, same terms, a different name on the purchase agreement.

Is board approval the same thing as the ROFR?

No — they are separate hurdles, and many companies have both. The ROFR is a right to buy; board (or company) approval is a right to consent to the transfer at all. A company can waive its ROFR and still withhold approval, which is why the transferability check reads for both before anyone talks price.

Can the company just block the sale entirely?

Some can, and some do — through a consent requirement with no obligation to grant it, or transfer restrictions with no exception outside company-run windows. When direct transfer is blocked, the remaining routes are a company tender when one opens, a forward agreement (where the company’s documents permit it), or waiting. Knowing which kind of company you hold is worth more than any price estimate.

Does a forward avoid the ROFR?

A forward defers the transfer rather than making one now, so the ROFR is typically triggered later, at settlement — not avoided. And some companies treat forwards as transfers under their documents, which can put the contract itself in conflict with them. Read a forward against the company’s documents, with counsel, before signing.

None of this is legal advice; the documents for your company control, and a bespoke structure deserves your own counsel.

Read next

• The process, step by step — where the ROFR sits in the eight steps of an actual sale.
• Direct transfer, SPV or forward — the structures compared, whatever the company’s documents allow.
• How the broker’s fee works — the success-fee model and the warning signs.
• Selling an LP interest — the fund position, where the GP is the gatekeeper instead.
• Every route to liquidity, compared — tender, broker, marketplace, forward, or wait.