Drag-Along Right

A term allowing a specified majority of shareholders to require all others to join a sale of the company on the same terms.

Example

If holders of 60% of shares approve a sale, remaining holders must sell too.

It can force a minority holder into a sale they oppose, so check the threshold and any minimum price protections.

Tag-Along Right — A term allowing minority shareholders to join a sale by majority holders on the same terms.
Protective Provisions — Terms requiring the consent of specified investors before a company takes certain actions, such as raising money, selling the company or changing share rights.

Small shareholders mostly sign, but what they sign matters — An acquisition involves warranties, indemnities, escrow and a drag-along that can compel minority holders to participate. Understanding the documents before signing is the last chance to know what you are agreeing to. (11 min)
Board seats, vetoes, drag-alongs and anti-dilution decide who holds power in a crisis — Control terms rarely matter when a company is thriving. They matter in down rounds, disputed sales and restructurings - exactly when founders and small investors most need to understand them. (12 min)