What is a tag along clause?

What is a tag along clause?

Tag-along rights also referred to as “co-sale rights,” are contractual obligations used to protect a minority shareholder, usually in a venture capital deal. If a majority shareholder sells his stake, it gives the minority shareholder the right to join the transaction and sell their minority stake in the company.

Are drag along rights common?

Yes, in some instances. If preferred stockholders have the ability to approve a drag along, common stockholders can refuse to vote on the transaction until preferred stockholders waive their rights. However, this very situation is one of the reasons why drag-along became more widely used.

What is the difference between drag along and tag along?

A drag-along provision enables a majority shareholder to force a minority shareholder to join in the sale of a company. Tag-along rights do not require a minority shareholder to sell; it simply gives them the option to tag-along and sell their shares along with the majority shareholder.

What’s another word for tag along?

What is another word for tag along?

What is the difference between tag along and drag along?

What are piggyback rights?

Piggyback registration rights are a form of registration rights that grants the investor the right to register their unregistered stock when either the company or another investor initiates a registration.

How does drag along work?

A drag along right allows a majority of shareholders to force minority shareholders to join the majority in a sale of the whole of the company to an unrelated third party. The expression “drag along” comes from the idea that the minority shareholders are being forced against their will to sell their shares.

How is it going along meaning?

If you describe how something is going along, you describe how it is progressing. Things were going along fairly well. [ VERB PARTICLE adverb] See full dictionary entry for go.

How do you use tag along in a sentence?

Examples of ‘tag along’ in a sentence tag along

1. He said we could tag along with them, to find out about his work.
2. He said we could tag along, if we were quiet.
3. She seemed happy to tag along with us.

What is drag along sale?

In a sale, the drag along agrees to sell the entirety of the stock they own. In a structured merger, the minority shareholder agrees to vote in favor of the merger. Drag along rights are often written in a term sheet, which outlines the terms by which a venture capitalist or investor makes an investment in a company.

What is tag along provision?

tag along provision. Investment agreement provision that gives a stockholders (shareholders) the right to liquidate a part or all of his or her investment at the time the firm is raising additional capital. He or she is paid usually from the newly acquired funds. Also called tag along right or take along provision.

What is tag along sale?

Tag along rights or “co-sale rights” are legal agreements that guarantee minority stakeholders the right to sell their shares in the company at the same time and under the same conditions as the majority stakeholder.