Drag-Along
Private Credit glossary · Private Credit Fundamentals
Definition
Right of majority shareholders to force minority shareholders to sell.
Drag-Along in plain English
Imagine you and four friends jointly own a lemonade stand, and someone offers to buy the whole thing — but one friend refuses to sell and blocks the deal. A drag-along right is a rule agreed to up front that lets the majority owners "drag" the holdouts along, forcing them to sell their shares too (usually at the same price and terms everyone else gets). Why it exists: buyers of a company almost always want 100% of it, not 95% with one stubborn holdout attached, so this right keeps a small minority from killing a good deal for everyone. It protects the majority's ability to actually cash out.
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