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ROFR (Right of First Refusal)

ROFR, or Right of First Refusal, is a contractual right granted to an individual or entity that provides them with the opportunity to purchase an asset, property, or investment before it is offered to others. In the context of business, a ROFR is commonly used in shareholder agreements, giving shareholders the right to purchase additional shares before they are offered to others.

A ROFR can be a valuable tool for a shareholder or investor as it allows them to maintain or increase their ownership percentage in the company, while also potentially limiting the entry of unwanted or unqualified investors. However, it can also limit the flexibility of the company to raise capital or make strategic transactions, as potential investors or buyers may be deterred by the existence of a ROFR.