---
title: "Tag-Along Right"
url: "https://mahouse.world/glossary/tag-along-right"
type: "glossary term"
topic: "Shareholder rights"
author: "Ihor Vlasov"
reviewed: "2026-09-20"
published: "2026-08-10"
---

# Tag-Along Right

A tag-along right lets minority shareholders join a sale by the majority on the same terms, so that a founder or a lead investor cannot sell their stake — and control — to a buyer while leaving everyone else behind with a new, unknown owner. It is the mirror of the drag-along: the drag lets the majority force a sale, the tag lets the minority share in one.

**Also known as:** Tag-along, Co-sale right, Tag right

## Key facts

- **Used at:** shareholders' agreements of private companies; invoked when a shareholder above a threshold agrees to sell to a third party
- **Binding:** yes — the selling shareholder must procure that the buyer offers the same price and terms to the tagging shareholders, or the sale cannot proceed
- **Typical trigger:** a sale of shares that would move control, or any sale by a holder above a stated percentage; small transfers to affiliates and to employees are usually exempt
- **Typical mechanics:** the seller gives notice of the price and terms; each minority holder has 10–20 days to elect to sell pro rata (or, in a change of control, all of their shares); the buyer takes everyone who tags or nobody
- **Parties:** the selling majority, the tagging minority, and the buyer, who must be told the tag exists before it prices the deal

## How a tag-along right works in practice

A buyer approaches a company's founder and offers to buy her 55%. Without a tag, she can sell, take the premium a buyer pays for control, and leave the investors and staff owning 45% of a company run by someone they never chose. With a tag, the offer must extend to everyone: the buyer either buys the whole company at that price per share or buys nothing. In practice the tag turns an approach for a stake into a sale of the company, which is the point — minority shareholders in a private company have no market for their shares, and the tag is their only exit.

The details decide how much protection it gives. A tag on any transfer catches too much — an angel selling 1% to another angel should not trigger it — so the trigger is usually a change of control or a sale above a threshold. The tagging holders get the same price per share, adjusted for class if preferred shares carry a preference, and the same terms, including any earn-out or deferred consideration. The buyer's diligence therefore has to include the cap table, because a tag it did not know about changes what it is buying and what it must pay.

In fintech the tag and the regulator interact: a buyer who ends up with 100% through tags needs approval as sole controller, and one who planned to buy 55% and hold the rest with the founders needs a different application.

## Example

A payments company has a founder with 55%, a growth fund with 30% and employees and angels with 15%. A bank offers the founder €22m for her 55% — €40m for the company. The shareholders' agreement gives everyone a tag on a change of control. The fund tags, and so do the holders of 14 of the 15% held by staff and angels; the bank must find €39.6m rather than €22m, and does, because it wanted the company and not a partner. One angel with 1% does not tag; the bank's application to the regulator names him as a remaining minority holder, and it later buys him out under the drag. Without the tag, the fund would have been a 30% shareholder in a bank subsidiary with no path to liquidity.

## Common mistakes

- A tag that triggers on every transfer, so routine secondary sales become company-wide events.
- Tagging holders offered the same price per share without adjusting for a liquidation preference, so common and preferred holders fight over a single number.
- A buyer pricing a majority stake without reading the shareholders' agreement.
- Tag notices with no deadline, leaving the sale open for months.
- Founders granting a tag without a drag, so the minority can join a sale but cannot be made to.

## Related terms

- [Drag-Along Right](https://mahouse.world/glossary/drag-along-right.md)
- [Share Purchase](https://mahouse.world/glossary/share-purchase.md)
- [Secondary Market](https://mahouse.world/glossary/secondary-market.md)
- [Cap Table](https://mahouse.world/glossary/cap-table.md)
- [Pro Rata Right](https://mahouse.world/glossary/pro-rata-right.md)
- [Term Sheet](https://mahouse.world/glossary/term-sheet.md)

— Ihor Vlasov, M&A FinTech Expert. Last reviewed 2026-09-20. https://mahouse.world/authors/ihor-vlasov