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right of first refusal

What is the Right of First Refusal?

As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal, has become a common and useful tool to add to your business negotiation skills.

The right of first refusal is a contractual guarantee that one side can match any offer that the other side later receives. This is perhaps most well-known in real estate negotiations. 

For example, a tenant negotiating an apartment lease with a prospective landlord could imagine bidding on the apartment down the road if the landlord ever decides to put it up for sale. Before signing the lease, they might ask the landlord for a right of first refusal—the right to match any legitimate third-party offer she receives for the apartment if she puts it up for sale. In this scenario, negotiating real estate right of first refusal could be a win-win for the tenant and the landlord.

But these matching rights, as they are sometimes called, may happen in other settings, as well. For many decades, Broadway plays have been developed and refined in workshops. Performers, producers, stage managers, and the creative team meet to rehearse for about a month, reports Michael Paulson in the New York Times. If all goes well, the producers stage the show for potential investors.

Under the Actors’ Equity union’s standard agreement, workshop participants received a salary of about $600 per week plus benefits, a right of first refusal to play their role on Broadway, and a share of 1% of any future royalty pool for 18 years. 

That’s just one example of how negotiation techniques can transfer across situations. 

Discover how to refine your negotiation skills with this free special report, Salary Negotiations: How to Negotiate Salary: Learn the Best Techniques to Help You Manage the Most Difficult Salary Negotiations and What You Need to Know When Asking for a Raise, from Harvard Law School.

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The following items are tagged right of first refusal:

Compensation Negotiation Tips: Lessons from Broadway

Posted by & filed under Salary Negotiations.

Compensation negotiation tips often revolve around encouraging job candidates to ask for a higher salary and teaching them how to frame their salary requests. But negotiators who take a broader approach to evaluating a job offer may be able to set themselves up for much greater long-term earnings. A negotiation initiated by the original cast … Read More

Right of First Refusal: A Tool to Negotiate with Care

Posted by & filed under Negotiation Skills.

Among many useful negotiation skills and strategies, a right of first refusal can often benefit negotiators. In a right of first refusal, the right holder is typically given the power to buy an asset on the same terms that the grantor would receive from any other legitimate, prospective bidder, according to Harvard Business School and … Read More

In Business Negotiations, Capitalize on a Right of First Refusal

Posted by & filed under Business Negotiations.

As dealmakers look for more sophisticated ways to reduce risks and increase returns, a right of first refusal—a contractual guarantee that one side can match any offer that the other side later receives—has become a common and useful tool to add to your business negotiation skills.

Negotiation Skills

Claim your FREE copy: Negotiation Skills

Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.

When the mergers-and-acquisitions (M&A) boom began in 1993, many deals … Read More