Transform your daily workflows and Redact Tag-Along Agreement

Aug 6th, 2022
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How to Redact Tag-Along Agreement

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hi im matt crowley this particular webinar is going to be on tag along and dragged along rights this will be a short one but it will be pretty important so for shareholders that are entering it either a buy sell agreement or perhaps an investor rights agreement or just an agreement among their co-founders on how theyre going to treat each other its important to consider how to handle situations where youre either in the minority or youre in the majority in terms of the number of shares you have when you think about the exit so when Ive talked about the exit Im not thinking about the companies going public Im thinking about someone acquiring your company most of the time the acquire is going to buy the assets of your company thats the reality but in the event that you managed to sell you the company and the buyer wants to buy the stock or the membership interests whatever form of equity you have if Im a shareholder in your company and I only own a third of the shares one of t

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Tag along rights (TARs) comprise a group of clauses in a contract which together have the effect of allowing the minority shareholder(s) in a corporation to also take part in a sale of shares by the majority shareholder to a third party under the same terms and conditions.
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.
Co-sale rights, also known as tag-along or (less often) take-me-along rights, are the rights of minority shareholders to join in when the majority shareholder or the founders sell their stock.
While Tag Along rights protect the minority shareholder, Drag Along rights are intended to favour the majority shareholder in the event of a exit opportunity.
Tag along rights (TARs) comprise a group of clauses in a contract which together have the effect of allowing the minority shareholder(s) in a corporation to also take part in a sale of shares by the majority shareholder to a third party under the same terms and conditions.
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.
Also known as piggyback rights and co-sale rights, tag-along rights are the right to participate in another persons negotiated sale of its equity. They enable certain equity holders to force a selling equity holder to include their equity in the sale on a pro rata basis.
Co-sale rights are similar to tag along rights, but applies when a majority shareholder is selling only a proportion of its shares. The sale is made conditional on an offer being made to minority shareholders to sell the same proportion of their shares.
What is a tag along clause? A tag along or take along provision gives a minority shareholder the right (but not the obligation) to have his shares bought on the same terms (including price) as majority shareholders.
Example of Drag Along Rights For example, a startup X decides to collect investment from a venture capital for raising capital. The founder of the startup holds 51% of the shares and sells the 49% shares to the venture capitalist.

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