A drag-along right lets specified owners require other owners to join a sale when stated conditions are met.
Definition
A drag-along right is a provision in an ownership agreement that can require certain owners to sell their interests as part of a transaction approved by specified parties. In a civil engineering firm, it may help a buyer acquire all or a defined portion of the company rather than leave minority owners behind. The clause determines who may invoke the right, what approvals are needed, how notice works, and which sale terms apply to participating owners. Some provisions address representations, indemnities, and limits on each owner's obligations. A drag-along right is not a general power to force a sale in any circumstance, and it does not itself set the company's value. Its reach depends on contract wording, corporate documents, and applicable law. Owners review it together with voting rules, transfer restrictions, and tag-along rights when evaluating a possible transaction.
How owners use it
- Owners identify the approval threshold that activates a drag-along provision.
- A buyer reviews which owners may be required to sell if the stated conditions are met.
- The agreement may specify how participating owners share transaction obligations.
