Drag Along

Drag-Along is a legal concept in corporate law.

The law provides that if the majority shareholder sells his stake, minority shareholders are forced to go into business. This right protects the majority shareholders.

The drag along entitles the shareholder to invest the right to force the other investor (s) to leave if the outgoing shareholder investing again, usually at the same price and conditions. Drag-along rights are fairly standard terms in an agreement to purchase shares. Drag-along rights typically terminate after an initial public offering.