# Tag-Along Rights

## Quick Definition

A provision allowing minority shareholders to join a sale if majority shareholders sell their stake.

## What are Tag-Along Rights?

Tag-along rights (also called co-sale rights) allow minority shareholders to participate in a sale when majority shareholders sell their shares. If a founder sells to a buyer, other shareholders can "tag along" and sell proportionally on the same terms.

## Why Tag-Along Matters

Tag-along protects minority shareholders from being left behind in a company with new controlling owners they did not choose. It ensures everyone gets the same opportunity to exit.

For investors, tag-along prevents founders from selling their shares to a strategic buyer while leaving investors stuck in an illiquid position with new owners they have no relationship with.

## How Tag-Along Works

If a founder negotiates to sell 50% of their shares, investors can require the buyer to purchase the same percentage of their shares on identical terms. The buyer must accommodate this or the deal cannot proceed.

**Formula**  
Tag-Along Calculation:  
If selling shareholder sells X% of their shares,  
Tag-along holders can sell X% of their shares on same terms

**Example**  
Your SaaS company founder wants to sell half their shares:  
- Founder owns: 60% (wants to sell 30% to secondary buyer)  
- Investor owns: 25% with tag-along rights

With tag-along, investor can require the buyer to also purchase 50% of their stake (12.5%) on the same terms. The buyer must buy 42.5% total or the founder cannot complete their sale.

## Related Terms

[**Drag-Along Rights**  
A provision allowing majority shareholders to force minority shareholders to join in the sale of a company.  
Learn more](/content/terms/drag-along-rights/index.html)

[**Right of First Refusal (ROFR)**  
The right to match any offer a shareholder receives before they can sell to a third party.  
Learn more](/content/terms/right-of-first-refusal-rofr/index.html)

[**Pro Rata Rights**  
The right for existing investors to participate in future funding rounds to maintain their ownership percentage.  
Learn more](/content/terms/pro-rata-rights/index.html)