Drag-along right

Drag-along right (DAR) is a legal concept in corporate law. The right assures that if the majority shareholder sells his stake, minority holders are forced to join the deal. This right protects majority shareholders. A drag-along right gives the investing shareholder the right to force the other investor(s) to exit, should the investing shareholder exit, once again, usually on the same price and terms. Drag-along rights are fairly standard terms in a stock purchase agreement. Drag-along rights typically terminate upon an initial public offering.

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