What is Right of First Refusal?
Right of First Refusal
Right of First Refusal (ROFR) is a legal clause giving the startup (or its major investors) the right to purchase shares from a selling shareholder on the same terms before they can sell to an outsider.
Why It Matters for Startups
Directly dictates the cap table and dilution structure during fundraising; understanding Right of First Refusal helps founders model equity distributions when structuring rounds for control over private stock transfers.
Detailed Deep Dive
Right of First Refusal (ROFR) is a legal clause giving the startup (or its major investors) the right to purchase shares from a selling shareholder on the same terms before they can sell to an outsider.
Frequently Asked Questions
Q:Why do companies require ROFR?
To keep competitor companies or unapproved block buyers from acquiring ownership stakes in the company.
Q:Does ROFR affect secondary sales?
Yes. Any founder or employee selling secondary shares must first offer them to the company/board under ROFR.
Quick Facts
- CategoryFunding
- Key ApplicationControl over private stock transfers
Coverage Trend12 Weeks
Related Startup Terms
Cite This Term
Reference this definition in your articles, research, or documentation to credit this source:
Right of First Refusal Media Coverage & Intelligence
No Direct Right of First Refusal News Today
We currently have no direct coverage articles matching "Right of First Refusal". Explore trending global startup topics below instead.
Trending Startup Stories
Prompt engineering fundamentals for Amazon Quick
Prompt engineering in Amazon Quick shapes how accurately its AI-powered feature respond to your requests. Part 1 of a two-part series covers the...
Prompt engineering by Quick component: Patterns and pitfalls
Part 2 of our Amazon Quick prompt engineering series goes component by component. Learn the prompt patterns that get the best results from Amazon Quick...