Unlocking Liquidity in Partnerships with Rights of First Refusal

Proven strategies to exit your investment while preserving value.

Many limited partners (LPs) find themselves in a difficult position when they want to sell their interests in private partnerships, especially when those partnerships are governed by a Right of First Refusal (ROFR). These provisions, while initially designed to protect existing partners, can also make it challenging for LPs to control the timing of their exit from these partnerships.

At LP Equity, we specialize in helping limited partners navigate these complexities and unlock liquidity, even in situations where a ROFR applies.

Understanding the Challenge of ROFR

A Right of First Refusal gives the partnership or other partners the option to purchase a selling partner’s interest before it can be sold to an outside buyer. While this right is intended to preserve control and alignment within the partnership, it often:

• Delays transactions, as the ROFR process can take months to resolve.
• Reduces market competition, since third-party buyers are hesitant to invest time in bids that may simply be matched by existing partners.
• Lack of Liquidity: partnerships with a ROFR are inherently less liquid.
• Depresses pricing, as the lack of an open market can result in lower offers.

For LPs, this creates a liquidity bottleneck — especially when the partnership doesn’t have an internal mechanism for secondary sales or redemption.

How LP Equity Helps

LP Equity provides creative, confidential solutions for LPs who desire liquidity opportunities from partnership investments constrained by a ROFR. Our team has deep experience in both secondary transactions and partnership governance, allowing us to navigate the ROFR process strategically and efficiently. 

Experience and Proven Results You Can Trust

For over 20 years, LP Equity has successfully completed transactions across hundreds of syndicated real estate partnerships, many of which included ROFR provisions. Our experience allows LPs to achieve liquidity and compliance while controlling their exit from a partnership.

If you are a limited partner seeking liquidity from a partnership investment, we would welcome the opportunity to discuss potential solutions. Please contact us at your convenience.