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Simply put: A ROFR provides the non-selling shareholders with a right to either accept or refuse an offer from a selling shareholder after the selling shareholder has received a third party offer for its shares.
A right of first refusal?often abbreviated as ?ROFR? (pronounced ?roafer?)?gives the holder of the right ?first dibs? on any potential share sale. Also known as a ?last look? provision, ROFRs are a common feature in venture financings.
The partners in a joint venture generally possess the right of first refusal on buying out the stakes held by other partners who leave the venture. Similarly, a ROFO gives non-selling shareholders in a shareholder agreement the right to purchase shares of selling shareholders before they are offered to the public.
?The Right of First Refusal is when the tenant or occupant has been given the designation which guarantees them the option to enter a transaction before anyone else,? explains Raquel Fernandez, broker and owner of CENTURY 21 ICON in Port Jefferson, New York.
In real estate, the right of first refusal is a clause in a contract that gives a prioritized, interested party the right to make the first offer on a house before the owner can negotiate with other prospective buyers.
Basically, if you have the right of first refusal, it means that your co-parent has to give you the option of taking care of the children if they need to find a caregiver for them during their custody time.
The right of first refusal (ROFR) can be a valuable tool in venture capital, allowing fund managers to control their stakes in portfolio companies by securing the privilege to buy newly issued shares before anyone else.
The partners in a joint venture generally possess the right of first refusal on buying out the stakes held by other partners who leave the venture. Similarly, a ROFO gives non-selling shareholders in a shareholder agreement the right to purchase shares of selling shareholders before they are offered to the public.