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A ROFR gives the company the right to pay the price you are being offered and acquire the shares underlying the options. A ROFR has the effect of making potenti
by not_that_noob 11y ago
A ROFR gives the company the right to pay the price you are being offered and acquire the shares underlying the options. A ROFR has the effect of making potential buyers reluctant to even deal with you, as the company can swoop in at the last minute and take the shares by paying what was agreed to. So effectively, it puts the company in control of the situation, and so best to get them on board to whatever's happening. First talk to an attorney though - with this amount of money at stake, it would be stupid not to.
- pc86 11y agoROFR is pretty standard for partnership businesses (I'm not talking about startups, but actual businesses operating on revenue), so I'm not so sure about it having any chilling effect on negotiations. My wife and I own 1/3 of a brick and mortar business is our town, and once we made an official offer two other people had to sign a document saying they were made the offer and declined (or whatever the legalese is). It's pretty common and I've had no experience where it causes any issues. It's a cost of doing business when you're talking about equity in a business that has a lot of people involved.