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Right of First Refusal (ROFR)

What Is Right of First Refusal (ROFR)?

The right of first refusal (ROFR) can give a company or VC investor priority to purchase shares that a shareholder—such as a founder or employee—wants to sell. 

As a founder, you may want to keep these provisions in mind. If you want to sell shares to a third-party, you may need to offer them to the company and your investors first. And if you have multiple investors, they may be able to buy them on a pro rata (i.e., proportional) basis based on their current holdings.

While the ROFR doesn’t prevent someone from selling shares, it could lead third parties to shy away from making an offer in the first place.

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