Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Right of First Offer

Definition

A contractual obligation by the owner of an asset to negotiate the sale of an asset with the rights holder before offering the asset for sale to third parties.

See Also

Right of first refusal.

Example

The owner of commercial real estate (lessor) decides to sell but has a right of first offer in place, which means the landlord must allow the lessee (business owner) a chance to make an offer. If the lessee (business owner) doesn’t make an offer, the owner of the property (lessor) is allowed to offer the property for sale to other parties.

Tips

The owner/seller of the property is not obligated and can accept or refuse a first offer from the lessee (business owner). The difference between a right of first offer and a right of refusal is that with the right of first offer, there is room for bargaining, and the seller and leaseholder can negotiate terms. With a right of refusal, the seller/owner can offer the property to a third party first, and the lessee (business owner) has the right to match the third party’s offering terms.