Right of First Refusal

Also called ROFR

A right of first refusal lets the company or its investors match any offer before a shareholder sells their shares to an outsider, giving insiders first claim.

Why it matters

ROFR keeps control over who ends up on the cap table, which companies value and outside buyers find limiting. It affects how easily founders and employees can sell shares in a secondary.

For example

An early employee wants to sell shares to an outside buyer, but the company's right of first refusal lets it step in and buy them at the same price first.

Related terms

Secondary Sale Tag-Along Rights Shareholders' Agreement

Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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