Drag-Along Rights
A clause that lets majority shareholders force minority shareholders to go along with a company sale, so a small group of holdouts can't block an acquisition.
Quick Answer
Can a minority shareholder block a company sale without drag-along rights?
Potentially, yes — without a drag-along provision, a holdout minority shareholder can refuse to sell their shares, which may complicate or even prevent a clean acquisition depending on the deal structure required.
- This clause exists specifically to prevent holdout scenarios
- It typically requires a defined majority threshold to trigger
- Standard in most modern stock purchase and investment agreements
The Lovie Advantage
Lovie flags which stakeholders are bound by drag-along terms directly on the cap table, ahead of any acquisition conversation.
See how this connects to Tag-Along Rights. For the formal definition, see the SBA's guide to mergers and acquisitions.
Start Free with Lovie →