Nov 4, 2009
What is a "co-sale" right?
A "co-sale" right is a contractual provision that requires a selling founder to offer an investor the opportunity to include a pro-rata portion of such investors shares in any sale by a founder. For example, if a founder who ones half of a company desires to sell half of his stock, he must offer the investors an opportunity to participate up to one eighth of the stock of the company (half of the proposed amount to be sold) on the same terms and conditions as the founder. This right is coupled with a right of first refusal in favor of the investors permitting them to purchase whatever the founder desires to sell. Thus, the founder first offers the shares to the investors for their purchase, if they turn him down, then the founder must offer the investors the right to participate in any sale to a third party arranged by the founder
