Right of first refusal (ROFR)

Also called: ROFR, first refusal

In one line

The company's (or investors') contractual right to match any outside offer and buy your shares themselves before you can sell to that buyer.

In plain English

Even with a willing buyer and agreed price, you usually must first offer the deal to the company. It can step in and buy on the same terms, or wave you through. Only then can the sale complete.

If you were explaining it to a 5-year-old

Before you sell your toy to a friend, you have to ask the club first: 'Want to buy it at this price?' If they say yes, they get it instead of your friend.

Why it matters when you sell

ROFR can delay or block a secondary and scares off some buyers. It's one of the first clauses to check in your shareholder agreement before you line up a sale.

Put it to use

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.

Right of first refusal (ROFR)

Related terms

Put it to use