drag-along rights

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Drag-Along Rights

The right of majority shareholders to force minority shareholders to sell their shares to a third party or to liquidate the company. Majority shareholders may exercise drag-along rights if a potential buyer will only agree to purchase 100% of a company.

drag-along rights

The right of majority shareholders to force minority shareholders to join in a sale of a company. These rights allow majority shareholders to complete a sale in the event a buyer wants to own 100% of the firm.
References in periodicals archive ?
Unfortunately, perhaps a majority of owners of businesses who seek private equity investment for the first time are not even aware of the existence of drag along rights; very often when business owners find out about drag along rights being required by an investor, that is the end of the discussion.
In a nutshell, the negotiation between an owner and investor with respect to drag along rights is a function of the relative bargaining strength of the parties and their negotiating ability.
Some private equity investors affectionately refer to their drag along rights as their "nuclear option.
Others, known as drag along rights, force minority shareholders to sell in a takeover, which can prevent them from thwarting a deal desired by the majority.
The book covers the following topics: Venture Capital in India - Background, Context and the Early Days The Venture Capital Process Entry of Foreign Players The Rise of Information Technology Major Players in Indian VC Contributors of Funds Key Differences in Indian Venture Capital Deal Structuring & Regulations Evaluating Opportunities Initial Steps to Investment Evaluating Risks Valuations Term Sheets Tag Along Rights & Drag Along Rights Incentives & Compensation Structures for Management Role of Boards VC Laws in India Exit Strategies Trends in Investments
The agreements also contain certain rights of first refusal, piggy back rights and drag along rights in the event of a third party offer on the Company's shares.
The book covers the following topics: - Venture Capital in India - Background, Context and the Early Days The Venture Capital Process Entry of Foreign Players The Rise of Information Technology Major Players in Indian VC Contributors of Funds Key Differences in Indian Venture Capital Deal Structuring & Regulations Evaluating Opportunities Initial Steps to Investment Evaluating Risks Valuations Term Sheets Tag Along Rights & Drag Along Rights Incentives & Compensation Structures for Management Role of Boards VC Laws in India Exit Strategies Trends in Investments
Such control restrictions include, but are not limited to, rights of first refusal, tag along rights and drag along rights.