Drag-along right

Drag-along right (DAR) is a concept in corporate law, often encountered in the context of venture capital and private equity.

Under the concept, if the majority shareholder(s) of an entity sells their stake, the prospective owner(s) have the right to force the remaining minority shareholders to join the deal.

Drag-along rights are fairly standard terms in a stock purchase agreement.

The provisions will typically specify the percentage of shareholders required for triggering the drag-along right.

Drag-along rights typically terminate upon an initial public offering.