Drag-Along Rights

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DEFINITION of 'Drag-Along Rights'

A right that enables a majority shareholder to force a minority shareholder to join in the sale of a company. The majority owner doing the dragging must give the minority shareholder the same price, terms, and conditions as any other seller.

INVESTOPEDIA EXPLAINS 'Drag-Along Rights'

This is designed to protect the majority shareholder. Because some buyers are only looking to have complete control of a company, drag-along rights help to eliminate minority owners and sell 100% of a company's securities to the buyer.

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