Right of First Refusal
Definition
Right of First Refusal: Right of first refusal (ROFR) gives certain parties the right to match any offer before shares can be sold to an outside buyer. Companies and existing investors typically have ROFR on employee share sales to control who becomes a shareholder.
Example Usage
“When our employee found a buyer for her shares, the company exercised ROFR to purchase them instead.”
Common Misconceptions
Related Terms
Secondary Sale
A secondary sale is when existing shareholders sell their shares to other investors, rather than the company issuing new shares. This provides liquidi...
Stock Options
Stock options give employees the right to purchase company shares at a fixed price (strike price) after vesting. Options are a common form of equity c...
Cap Table
A capitalization table (cap table) is a spreadsheet or database showing the equity ownership of a company, including shares held by founders, employee...
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