Drag-along and tag-along rights

Definition

Cap-table terms deciding who can force a sale and who can join one.

Why It Matters

Together they decide whether you control your own exit, and a self-funded buyer never meets them while an investor-backed one signs both. A drag-along lets holders above a threshold compel everyone else into a sale they have agreed, which is how a minority operator can be sold out of the company they run. A tag-along is the protection in the other direction: if the majority sells, you can put your shares into the same deal at the same price rather than being left holding a minority under a new owner. Read the threshold and the price protection together, because a drag with no tag beside it is one-way.

In numbers: On a cap table where investors hold 75% and the drag threshold is a simple majority, an offer they accept is an offer you sell into; a tag-along is what lets your 25% go out at the same per-share price rather than staying behind.