Tag-along rights let minority owners join a sale by majority owners under defined conditions.
They are designed to prevent minority owners from being left behind when controlling owners sell.
Why tag-along rights matter
If majority owners sell to a new buyer, minority owners may want the same chance to exit on comparable terms.
Tag-along rights can create fairness and predictability in private-company ownership transfers.
Where tag-along rights appear
Tag-along rights appear in shareholder agreements, operating agreements, investor rights agreements, venture financing documents, and buy-sell agreements.
They often include notice, timing, participation percentage, and sale-term requirements.
How it differs from nearby terms
Tag-along rights let minority owners join a sale. Drag-along rights let majority owners require minority owners to participate in a sale.
Right of first offer gives a chance to buy before a transfer, while tag-along rights give a chance to sell alongside another owner.
Practical example
A founder plans to sell a large block of shares to a buyer. Minority investors use tag-along rights to sell a proportional share on the same terms.
Related Terms
Quick check
Question: Do tag-along rights usually protect minority owners in a sale?
Answer: Yes. They let minority owners join certain sales by other owners.