Tag-along rights are a contractual provision that lets minority shareholders join a sale on the same terms when majority or designated shareholders sell. Also called co-sale rights, the provision is typically found in stockholders' agreements and triggered when founders or other designated holders sell. It protects smaller holders from being left in the company after key shareholders have exited at a price they weren't given the opportunity to participate in. It is the structural counterpart to drag-along rights: drag-along protects majority holders from minority blocking; tag-along protects minority holders from majority leaving them behind.
The typical structure: tag-along is triggered when a defined holder (often the fou...