Tag-Along Rights
Contractual rights that allow minority shareholders to join a majority shareholder's sale on the same terms and price.
Tag-along rights protect minority investors from being left behind when a controlling shareholder exits — ensuring they can participate in any liquidity event on equivalent economic terms. Without tag-along rights, a majority shareholder could sell their stake at a premium while minority holders remain locked in with a new controlling party they didn't choose.
Tag-along rights are standard protective provisions in private equity term sheets and are essential for minority co-investors and early-stage shareholders.
Frequently Asked Questions
What are tag-along rights?
Tag-along rights allow minority shareholders to join a majority shareholder's sale on the same terms and price — protecting them from being left behind when a controlling shareholder exits.
Why are tag-along rights important?
Without tag-along rights, a majority shareholder could sell at a premium while minority holders remain locked in with a new controlling party. Tag-along rights ensure equal treatment in liquidity events.
When are tag-along rights triggered?
Tag-along rights are triggered when a majority or controlling shareholder initiates a sale. Minority holders can then elect to sell their shares on the same terms and at the same price per share.
Explore with Ora
Ask Ora anything about tag-along rights and related investment concepts. Get Bloomberg-grade intelligence in plain English, in seconds.