co-sale rights

Definition

Also called tag-along rights, these allow minority shareholders to join a sale transaction if majority holders are selling their shares. The 'if you're abandoning ship, I'm coming too' clause.

Example Usage

When the lead investor negotiated a secondary sale, our co-sale rights let us liquidate 20% of our holdings too.

Origin

Corporate law protection for minority shareholders, standard in VC deals since the 1990s

Fun Fact

Co-sale rights prevent the classic private equity move of selling to someone terrible and leaving minority investors trapped with the new owner.

Source: Corporate governance and minority shareholder protections

Related Terms

Advanced

full ratchet

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hockey stick growth

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distribution waterfall

The specific order in which investment proceeds are distributed among LPs and GPs based on the fund's legal agreements. It's the pecking order that determines who eats first at the exit feast.

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commitment period

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exit

In startup land, the glorious moment when founders and investors finally cash out, either through acquisition or IPO, turning years of ramen dinners and sleepless nights into actual money. It's the entrepreneurial equivalent of winning the lottery, except you had to build the lottery first. Every VC's favorite word and every founder's obsession after their Series A.

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Valuation

The estimated worth of a company, a number that ranges from scientifically calculated to completely made up depending on who's doing the estimating. Startup valuations in particular are an art form, where a company with no revenue and an idea on a napkin can be worth a billion dollars if the napkin is impressive enough.

💰 Finance / Accounting🚀 Startup / VC

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