Tag-Along Right

A tag-along right (co-sale right) gives minority shareholders the right to sell their shares on the same terms when a majority shareholder sells its stake to a third party. Unlike a drag-along, it is a right and not an obligation: the minority shareholder may join in but is not required to.

The protective rationale benefits the minority. If the majority shareholder sells at an attractive price, the small shareholder should not be left behind with a new and possibly unknown co-shareholder, but should be able to participate in the favourable opportunity. The tag-along right thus prevents the minority from being excluded from an advantageous exit. In financing rounds such as the Series A or the seed financing, it belongs to the standard catalogue.

Tag-along and drag-along right form a coordinated pair of clauses in the shareholders' agreement. In startup financing, we ensure a balanced calibration of both mechanisms.