What are tag-along rights?
Tag-along rights (also called co-sale rights) give minority investors the right to sell their shares alongside a majority shareholder — typically a founder or other major investor — on the same terms, when that majority shareholder sells to a third party. Tag-along rights protect minority investors from being left behind in a control transaction.
Tag-along rights are standard in venture-backed companies, structured in investor rights agreements or stockholders’ agreements. They are typically paired with drag-along rights, which compel minority investors to sell when a majority sells.