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Tag Along Rights

The contractual rights of a minority Stockholder to be included in (or to tag along in) a transaction where the majority Stockholder is selling its interests to a third party. Compare Drag Along Rights. Also referred to as Co-Sale Rights. In Startups, if Tag Along Rights were negotiated for in connection with a Preferred Stock Financing, these rights would typically be found in the ROFR Agreement.

Target Company

Commonly used name for the company or business purchased in a transaction in which the economic buying and selling entities are discernible.

Tender Offer

A unilateral offer by a Buyer to purchase a Target Company’s Securities directly from the owners of those Securities, usually for all cash. A Tender Offer, unlike a Merger Agreement, does not need the assent of the Target Company, which is not a party to the transaction.

Term Sheet

Summary of a transaction’s principal terms. Term Sheets are very common in Financings and are also very common for proposed Acquisitions of non-public Target Companies, transactions which do not require public disclosure of the negotiations. Investors typically provide Startups with their proposed Term Sheet, which is then negotiated before a decision is made to move forward with the Financing. Term Sheets are rarely intended to be binding and ordinarily should contain a specific provision to that effect. A Term Sheet is normally intended simply to serve as a guide to assist in the preparation of definitive documents for the transaction. There are instances, however, in which a party has tried, sometimes successfully, to enforce a Term Sheet in court.


When a product or service begins to be used or purchased, essentially a proof of concept.

Trade Secret

A formula, device, technique, process or other important component of a business that derives economic value from not being generally known or ascertainable and over which a company takes reasonable efforts to maintain its secrecy. A good example of a Trade Secret is the Coca Cola recipe.


A word, phrase, symbol and/or design that distinguishes the source of goods of one party from another party. In some cases, people use this term to refer to both Trademarks and Service Marks. While Trademarks in the US do not require federal registration, registration does provide certain advantages.


French for a slice or a portion, commonly used to describe each time an investment is made in connection with a Financing that has multiple Closings. As an example, if a Series A Financing has three Closings, you could refer to this as a Financing with three Tranches.

Transaction Documents

The principal documents involved in a particular transaction. In a Preferred Stock Financing, the Transaction Documents typically include a Stock Purchase Agreement, amended and restated Charter, Investor Rights AgreementROFR Agreement and Voting Agreement.

Transfer Restrictions

Restrictions that limit a Stockholder’s ability to transfer Shares of Stock in a company typically set forth by statute, provisions in a company’s Organizational Documents or provisions in the Equity grant documentation. In Startups, most Common Stock is subject to Transfer Restrictions in the form of a ROFR. Holders of Preferred Stock may also be subject to a ROFR, although this is not very common for VCs (it is more common, however, for Private Equity holding Preferred Stock to accept such restrictions).

Treasury Stock

Issued Shares that are purchased by the Issuer and not returned to the status of authorized but unissued Shares. Treasury Stock thus remains issued but not outstanding (i.e., held by third parties).

Triangular Merger

Merger in which the Target Company and a Subsidiary of the Buyer are merged, with the result that the Buyer becomes the owner (usually of all the Equity) of the resulting merged entity. Triangular Mergers are by far the most common Merger structure because they do not impact any of the Buyer’s legal, corporate and tax attributes.

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