Rights & follow-on
Tag-along rights
Also called Co-sale rights
The right to sell a proportionate part of your shareholding on the same terms whenever a founder or major shareholder sells theirs.
In plain English
A tag-along protects minority holders from being left behind. If a founder agrees to sell a large block to an outside buyer, holders of the right may require the buyer to take a proportionate part of their shares too, at the same price and on the same terms.
The problem it solves is specific and real. Without it, a founder who has found a buyer for their own stake can take liquidity while everyone else remains locked into a company whose leadership has just cashed out and whose ownership has changed hands. The tag-along ensures that any route to money is shared proportionally.
It is conventionally attached to founder shares rather than to all transfers, and it is usually combined with a ROFR in a single provision: the shares must first be offered to existing holders, and any who decline to buy may instead sell alongside.
Note the direction of travel. A tag-along is a minority protection, exercised by the small against the large. A drag-along is its opposite — a majority right that compels the minority to sell. Almost every shareholders' agreement contains both, and reading only one gives a badly incomplete picture.
What it means for your cheque
The scenario tag-along protects against is more common than it sounds. Founder secondaries — where founders sell a portion of their holding in a later round — have become normal at Series B and beyond. A tag-along means that when the founders take money off the table, you have the option to do the same.
For most angels the right is worth having and rarely exercised. Its practical value is that it makes founder liquidity visible: the notice you receive tells you the founders are selling, at what price, and to whom, which is information you would not otherwise have.
Do the arithmetic
A founder secondary with and without a tag-along
A founder agrees to sell $4m of shares to an incoming investor at $8.00 per share as part of a Series B. You hold 1.5% of the company.
| Without a tag-along | the founder sells $4m; you sell nothing and receive no notice |
|---|---|
| With a tag-along — shares offered by the founder | 500,000 at $8.00 |
| Your proportionate entitlement to participate | based on your holding relative to participating holders |
| Shares you may include | about 22,000 |
| Cash you can take off the table | about $176,000 |
| Effect on the founder | sells proportionately less, or the buyer increases the total |
The right converted a founder-only liquidity event into a shared one, and gave you your first cash return from a company that has not exited.
At the table
What to negotiate
- Check the tag-along covers founder transfers specifically, and at what threshold it bites — a right that triggers only above a 50% sale is close to useless.
- Establish whether it applies to secondary sales inside a financing round, which is where founder liquidity actually happens.
- Ask whether the proportion is calculated across all shareholders or only those with the right.
- Check the notice period and make sure it is long enough to act on.
- Read the drag-along in the same document. The two travel together and only one of them is on your side.
Tag-along rights: common questions
When would a tag-along actually be triggered?
Does a tag-along guarantee I can sell all my shares?
How is it different from a drag-along?
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