Approve Signatory Tag-Along Agreement For Free

A tag along provision is a clause that allows minor shareholders to 'tag along' with a larger shareholder or group of shareholders if they find a buyer of their shares. The purpose of a tag along provision is to ensure minor shareholders are not left behind in the event a major shareholder decides to exit the venture.

Tag along clauses are designed to protect the minority shareholders from being left behind when a majority shareholder decides to sell their shares. If a minority shareholder held 10% of the shares in a company, it would be difficult to sell as most buyers will want 100% of a company.

Tag-along rights are pre-negotiated rights that a minority shareholder includes in their initial issuance of a company's stock. These rights allow a minority shareholder to sell their share if a majority shareholder is negotiating a sale for their stake.

Rights of first refusal are often paired with co-sale rights (also known as tag-along rights). Co-sale rights give the holder the option to participate in the sale of the startup?or any other liquidation event?on equal terms as the other parties involved.

Tag-Along Rights If a shareholder sells their shares to a third-party the other shareholders have the right to force the third party to buy their shares on the same terms.

Examples of Using Tag Along Rights Let us assume that Investor A holds 75 percent of the shares, while Investor B holds 25 percent. If Investor A sells his or her shares, the remaining 25 percent of the shares might lose value, and Investor B will lose money.

The phrase 'Tag Along' means to follow along after someone; to go along with someone. Example of Use: ?The family dog tagged along after the children wherever they went.?

When a majority shareholder sells their shares, a tag along right will entitle the minority shareholder to participate in the sale at the same time for the same price for the shares. The minority shareholder then 'tags along' with the majority shareholder's sale.