Tag-Along Rights

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DEFINITION of 'Tag-Along Rights'

A contractual obligation used to protect a minority shareholder (usually in a venture capital deal). If a majority shareholder sells his or her stake, then the minority shareholder has the right to join the transaction and sell his or her minority stake in the company.

Also referred to as "co-sale rights".

BREAKING DOWN 'Tag-Along Rights'

Tag-alongs effectively oblige the majority shareholder to include the holdings of the minority holder in the negotiations in order to facilitate the possibility that a tag-along right is exercised.

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