Financing Term Sheet Deep Dive: Rights of First Refusal and Co-Sale

Whether you’ve only recently decided to seek out capital for your business or you’ve already received (or made) your first offer, the term sheet (or “letter of intent”) is an integral part of the process.  

In this series we’ll look to shed some light on the legal language contained in that term sheet by taking a “deep dive” into the most often used terms and how choices made in selecting those terms can affect both Company and Investor.  Check out an overview here.

Financing Term Sheet Deep Dive will be published each Monday morning until conclusion. For more information, check out or drop Rick a line at


In this, the second to last post in our “Financing Term Sheet Deep Dive” series, we turn to the concepts of “First Refusal” and “Co-Sale”; two related ideas designed to limit changes to a Company’s capital structure after a financing has been concluded.

While both concepts are complicated enough to require their own definitive document as part of a closing (a “Right of First Refusal and Co-Sale Agreement”), they are simple enough to be summarized in the NVCA model term sheet in only one paragraph.

Let’s take a look at the model language.

Continue reading “Financing Term Sheet Deep Dive: Rights of First Refusal and Co-Sale”