Why it matters
ROFR on common stock is reasonable when symmetric: it lets existing holders preserve the cap table against unwanted outsiders. Asymmetric ROFR is leverage. Strategic secondaries to aligned partners — a tier-one fund offering to buy founder shares as part of an A round, an acquirer offering early to lock you in — can be silently blocked or claimed by the existing investor at the matching price, regardless of strategic fit. In the worst case, the investor uses ROFR to consolidate the cap table around themselves over time.
How to negotiate
Make ROFR mutual or remove it. If retained, set a meaningful threshold (1% of fully-diluted) below which transfers are unrestricted, exclude transfers to family members and trusts for estate planning, and exclude transfers to a list of pre-approved strategic transferees. Time-box the matching window tightly (15-20 days) so ROFR can't be used to slow a transaction to death.
Example language
How this clause typically appears in a term sheet. Read it carefully — predatory language is often buried in routine paragraphs.
Any proposed transfer of Common Stock by a Founder shall first be offered to the Major Investors on the same terms and conditions, and the Investors shall have thirty (30) days to elect to purchase such shares.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific deal may have nuances that change the analysis. Always review your term sheet with qualified legal counsel before signing.