Drag-along rights

Drag-along rights allow a majority shareholder to force a minority shareholder to agree to the terms of sale for a business. These rights require the majority shareholder to provide the same sale terms to the minority shareholder that are being offered to other shareholders. In essence, drag-along rights are designed to protect a majority shareholder from being subject to the vagaries of a minority shareholder when negotiating the sale of a business. These rights are attractive for an acquirer, since the buyer can gain control of 100% of all outstanding shares of the acquiree.

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Mergers and Acquisitions