---
title: "What Is Tag-Along Rights?"
term: "Tag-Along Rights"
description: "Tag-along rights (co-sale) let minority investors sell a proportional stake alongside a major shareholder who is selling, on the same terms and price."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["deal-terms"]
source: https://venturecapitaltracker.com/glossary/tag-along
---

# What Is Tag-Along Rights?

> Tag-along rights (co-sale) let minority investors sell a proportional stake alongside a major shareholder who is selling, on the same terms and price.

**Tag-along rights** allow minority shareholders to **tag along** when a large holder sells, receiving the same price and terms pro rata.

## How it works

If a founder sells 30% to a buyer, a 10% preferred holder with tag rights can include up to 10% of the company in the transaction—preventing insiders from cashing out at a premium while minorities stay illiquid. ROFR may run before tag; notice periods and minimum sale sizes are negotiated.

Standard in US **investors' rights** agreements and UK SHAs.

## Why it matters

- **Founders:** Plan cap table sales knowing investors may exercise tag and enlarge the sale.
- **Investors:** Tag protects against asymmetric liquidity between insiders and funds.

## Common mistake

Assuming tag applies to any primary round. It typically triggers on **secondary** sales by major holders, not new issuances.

## Related ideas

Drag-along, ROFR, co-sale, and secondary sale.
## When you will see it

Tag-along rights protect minority investors when founders sell secondary shares to a buyer who wants control without buying the whole company.

## Questions to ask

- What minimum sale size triggers tag rights?
- Do tag holders get the same price and terms as the selling major?
- Does ROFR run before tag can be exercised?
## Practical takeaway

Treat **tag-along rights** as something to define precisely in writing—not assume everyone in the room shares the same meaning. In term sheets, board decks, and LP updates, tie the concept to a concrete decision: a vote, a price input, a fund policy, or a metric formula. When definitions drift, teams misprice risk, miss leverage, or waste cycles on the wrong conversation.

## FAQ

### What is tag-along rights in simple terms?

Tag-along rights (co-sale) let minority investors sell a proportional stake alongside a major shareholder who is selling, on the same terms and price. It is a label you will hear in deal conversations, cap tables, and fund marketing—not abstract theory.

### Why does tag-along rights matter?

Protects small holders when founders or majority investors execute a secondary or exit. Founders and investors both need a shared definition before term sheets, diligence, or exit talks get serious.


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Source: https://venturecapitaltracker.com/glossary/tag-along