LegalDeal Structure
Drag-Along Rights
Also known as: Drag rights, forced sale rights
A contractual provision that lets majority owners force minority owners (like founders with rollover equity) to sell their shares when the majority sells the company.
WHY IT MATTERS
When a founder accepts rollover equity, they become a minority owner in a PE-controlled company. Drag-along rights mean the founder is forced to participate in the PE firm's next exit — whether the founder wants to sell or not, whether the timing is right or not, whether the price is good or not. The PE firm is typically optimizing for their fund's return timeline, which may not match the founder's personal financial plan. Drag-along is standard and usually non-negotiable, but the price floor and information rights around it are.