Drag-Along Rights
Definition
Drag-Along Rights: Drag-along rights allow majority shareholders to force minority shareholders to join in the sale of a company on the same terms. This ensures that a buyer can acquire 100% of the company without holdout shareholders blocking the deal.
Example Usage
“When 80% of shareholders approved the acquisition, drag-along rights forced the remaining 20% to sell.”
Common Misconceptions
Related Terms
Acquisition
An acquisition occurs when one company purchases another, either for cash, stock, or a combination. For startups, being acquired is a common exit path...
Exit
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Term Sheet
A term sheet is a non-binding document outlining the key terms of a proposed investment, including valuation, investment amount, board composition, li...
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