Drag-Along Right is a legal concept in corporate law. The right assures that if the majority shareholder sells his stake, minority holders

Minority interest

Minority interest in business is an accounting concept that refers to the portion of a subsidiary corporation's stock that is not owned by the parent corporation...

 are forced to join the deal. This right protects majority shareholders. Drag-along rights are fairly standard terms in a stock purchase agreement. Drag-along rights typically terminate upon an initial public offering

Initial public offering

An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...

.

See also

• Tag-Along right
  Tag-along right
  A tag-along right is a legal concept in corporate law. The right assures that if the majority shareholder sells his stake, minority holders have the right to join the deal and sell their stake at the same terms and conditions as would apply to the majority shareholder. This right protects minority...
  
  , the converse concept
• Pre-emption right
  Pre-emption right
  A pre-emption right is a right to acquire certain property in preference to any other person. It comes from the Latin verb emo, emere, emi, emptum, to buy or purchase, plus the inseparable preposition pre, before. It usually refers to property newly coming into existence...
  
  
• Right of first refusal
  Right of first refusal
  Right of first refusal is a contractual right that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party...
  
  

External links

• Drag-along rights
• The Dark Side of Drag-Along/Tag-Along Rights