Drag-Along
Private Equity glossary · Private Equity Fundamentals
Definition
Right of majority shareholders to force minority shareholders to sell on the same terms.
Drag-Along in plain English
Imagine four friends jointly own a house, and one friend owns just a tiny sliver while the others own most of it. A drag-along right lets the big owners, when they find a buyer for the whole house, 'drag' the small owner into the sale too — forcing them to sell their sliver on the exact same terms and price. Why it exists: buyers usually want 100% of a company, not 95% with one holdout who can block the deal, so this right keeps a small shareholder from wrecking a sale everyone else wants. The fairness catch is 'same terms' — the minority can't be squeezed at a worse price than the majority gets.
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