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Drag-Along Rights

Also called Drag-Along

A clause that lets a defined majority of shareholders force the rest to go along with a sale of the company, so a small holder cannot block a deal the majority wants.

Why it matters

Drag-along keeps a single holdout from killing an acquisition, which is why acquirers like clean ones. Founders should understand who can trigger it and on what terms, since it can force your hand in an exit.

For example

An acquirer offers to buy the company; a 75 percent shareholder vote triggers the drag-along, forcing a small angel who wanted to hold out to sell on the same terms.

Go deeper

Transfer of Share Rights: Tag-Along and Drag-Along Explained Qapita · article ROFR alone does not finish the job: you still need tag-along so a minority founder is not stranded when the majority exits, and drag-along so one holdout cannot block a clean 100 percent sale. This piece explains both with sample clause language and the usual 50 percent-plus trigger, from the same India-context source as the ROFR guide. Open qapita.com →

Related terms

Tag-Along Rights Exit Shareholders' Agreement

Also in Starting Up

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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