Drag-along
A provision forcing minority shareholders to join a sale that has been approved by a defined majority.
Why it matters
It stops a small holder blocking an exit that everyone else wants, which is why acquirers insist on it. It also means you can be compelled into a sale you personally would not choose.
A worked example
If holders of 70% approve an acquisition, the remaining 30% are dragged into the same transaction on identical terms.
What is typical
Universal in venture deals. Negotiate the threshold and which classes must consent, not whether it exists.
Related terms
Tag-along
A provision letting minority shareholders join a sale on the same terms as a selling majority holder.
Read more →Preferred stock
The share class investors buy, carrying rights that common stock does not have.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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