What are drag-along and tag-along rights?
By SuLe · Updated 1 June 2026
Drag-along and tag-along are share-transfer rights that control what happens to minority shareholders when the company is sold. Drag-along lets a selling majority force minorities to sell on the same terms, so one small holder cannot block an exit. Tag-along lets minorities join a majority sale on the same terms, so they are not left stranded.
Key facts
- Drag-along forces minority holders to sell on the same terms as the majority — it prevents a small shareholder blocking a clean exit.
- Tag-along gives minority holders the right (not the obligation) to join a majority sale on the same terms.
- Drag thresholds are commonly set somewhere in the 50–75% of shares range, often also requiring investor-majority consent.
- Both rights live in your articles of association or shareholders' agreement — not in a specific statute.
- They usually appear together, balancing the interests of majority and minority holders.
What does a drag-along right actually do?
A drag-along right lets a defined majority who have agreed to sell "drag" the remaining shareholders into the same deal. Everyone sells to the buyer on the same terms and at the same price per share.
Its purpose is to deliver a buyer 100% of the company. Trade buyers and later investors usually insist on clean control, and without a drag, a single holdout — a departed founder, an early angel — could block or hold the sale to ransom.
The mechanism matters. The threshold that triggers the drag, whose consent is required, and any protections on price and process are all drafting choices, so read the exact wording in your articles.
What does a tag-along right protect against?
A tag-along (or "co-sale") right protects the minority. If the majority finds a buyer, minority holders can elect to include their shares in that sale on the same terms.
Without it, a founder or fund could sell their controlling stake privately and leave smaller shareholders holding illiquid minority shares in a company now run by a stranger. Tag-along ensures the exit is shared, not captured.
It is a right, not a duty — minorities can join or decline. That asymmetry is deliberate: drag compels, tag merely permits.
What threshold and consents should I look for?
There is no statutory figure — the trigger is whatever your articles say. In UK venture deals, drag thresholds are commonly set somewhere between 50% and 75% of shares, and investor rounds often add a requirement for investor-majority consent on top.
That combination means a sale usually needs both a share majority and the investors' agreement before minorities can be dragged. Founders should check whether the threshold could let investors force a sale the founders oppose, or vice versa.
These rights are contractual and sit within the framework of the Companies Act 2006, which governs how share transfers and class rights operate. UK venture articles frequently follow the BVCA model structure.
| Drag-along | Tag-along | |
|---|---|---|
| Who benefits | Selling majority (delivers 100% to buyer) | Minority shareholders |
| Effect | Compels minorities to sell | Lets minorities join the sale |
| Obligation or right? | Obligation on the minority | Right (optional) for the minority |
| Same terms as majority? | Yes | Yes |
| Typical trigger | Majority of shares, often 50–75%, plus investor consent | Majority accepting an offer |
| Prevents | A holdout blocking an exit | A minority being left behind |
Worked example
Ravi and Léa co-found a logistics SaaS company and take seed investment from a fund. Their articles include a drag-along triggered at 75% of shares with investor-majority consent, and a matching tag-along.
Three years on, a trade buyer offers to acquire the whole company. Ravi, Léa and the fund together hold 82% and agree to sell. Using the drag, they require the remaining angels and ex-employees to sell their shares on identical terms, so the buyer gets 100%.
Had the founders instead sold only their own controlling block to a buyer, the angels could have invoked their tag-along to sell alongside — on the same price and terms — rather than being left as minority holders under new ownership.
Where founders go wrong
Ignoring the drag threshold until an offer lands
— by then it is fixed; negotiate whose votes and consents are needed while you still have leverage.Assuming a drag protects you
— a drag can be used to force you out too, if the threshold sits with investors and other holders.Forgetting tag-along for early angels
— without it, a founder secondary or partial sale can strand your earliest backers and sour relationships.Not aligning the articles and shareholders' agreement
— conflicting drag or tag wording across documents causes disputes at exactly the wrong moment.
Related questions
What is the difference between drag-along and tag-along?
Drag-along lets a selling majority force minority shareholders to sell on the same terms, so a small holder cannot block a clean sale. Tag-along works the other way: if the majority sells, minorities have the right to join on the same terms and are not left stranded.
What percentage triggers a drag-along?
It depends entirely on how your articles are drafted. Thresholds are commonly set somewhere in the 50–75% range of shares, and investor deals often also require investor-majority consent. Always read the exact figure and the consent conditions in your own articles.
Can a drag-along force me to sell at a bad price?
It can force you to sell on the same terms the majority accepted. That is why the drag terms — the threshold, whose consent is needed, and any minimum-price or process protections — are worth negotiating before you sign, not after an offer arrives. [More: What founder protections should I negotiate in a term sheet?]
Do I need both drag-along and tag-along?
Most UK venture articles include both. Drag-along protects a future sale from being blocked; tag-along protects smaller holders from being left behind. They balance each other, which is why they usually appear together in a shareholders' agreement or articles. [More: What should a shareholders' agreement include for a UK startup?]
Drag-along and tag-along decide whether you can be forced to sell — or forced out — and on whose say-so. The threshold and consent wording is where the real negotiation sits, and it is far cheaper to fix in the articles than in a dispute at exit. A SuLe solicitor can check how these rights fall across your cap table. Book a free term sheet review before you agree the terms.
Keep reading: What founder protections should I negotiate in a term sheet? · What are reserved matters (investor consent rights)? · What is a liquidation preference? · Ordinary shares vs preference shares in UK startups — what's the difference? · What should a shareholders' agreement include for a UK startup? · What is a founder secondary and when can I sell some of my shares?
Primary sources: BVCA — model documents for UK venture capital · Companies Act 2006
