Equity & Ownership

Tag-along Rights

Understand tag-along rights — the mirror of drag-along rights — which let minority owners join a sale the majority makes, on the same terms, so they're not stranded when the majority exits.

  • Beginner
  • 14 min total
  • 13 chapters

What decision this helps you make: How a tag-along right protects the minority — letting them join the majority's sale on the same terms rather than being left behind.

What this topic is

A tag-along right (co-sale right) lets minority owners join, or "tag along" with, a sale a majority owner is making — selling their shares on the same terms and at the same price, in proportion — rather than being left behind.

Why it matters

It protects the minority from being stranded: without it, a majority owner could sell their controlling stake and cash out, leaving the minority holding shares in a company now controlled by someone they didn't choose, with no chance to exit on the same terms.

Who should learn it

Minority owners and investors — and anyone structuring shareholder agreements.

What you will understand

  • Understand a tag-along right as the minority joining the majority's sale
  • See why it protects the minority from being stranded
  • Know how it differs from (and complements) a drag-along right
  • See why both appear in shareholder agreements

Prerequisites

Common misconception

"If the majority owner sells their stake, the minority is just stuck with the new owner." Not with a tag-along right. It lets the minority join a sale the majority makes — selling their shares on the same terms and price, in proportion — so they're not stranded holding shares in a company now controlled by someone they didn't choose. It's the mirror of a drag-along: the drag lets the majority force the minority to sell; the tag lets the minority choose to join — protecting them from being left behind.