Right Of First Offer

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DEFINITION of 'Right Of First Offer'

A contractual obligation by the owner of an asset to a rights holder to negotiate the sale of an asset with the rights holder before offering the asset for sale to third parties. If the rights holder is not interested in purchasing the asset or cannot reach an agreement with the seller, the seller has no further obligation to the rights holder and may sell the asset freely.

INVESTOPEDIA EXPLAINS 'Right Of First Offer'

A right of first offer is related to a right of first refusal, but the former is considered to favor the seller while the latter is considered to favor the rights holder. Assets that have a right of first refusal attached to them can be more difficult to sell because potential buyers may not want to go to the trouble of negotiating a deal that must be offered to another party first.

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