What are drag-along rights?

Drag-along rights compel minority shareholders to join a sale of the company that the specified majority — typically the board plus a majority of preferred and common — has approved. They prevent a small holder from blocking or extracting a toll on an exit everyone else wants.

For founders, the drag is mostly protective; the details that matter are who counts toward the triggering majority and whether dragged shareholders can be forced to accept liability terms beyond their proceeds.