As anyone who has been on either side of a venture capital deal knows, a fund raising agreement usually has so many provisions that someone inexperienced needs a glossary to read it.
Often one of these provisions discusses “drag along rights.” As Investopedia explains, these rights allow “a majority shareholder to force a minority shareholder to join in the sale of a company.”
The inclusion of drag along rights in VC agreements is becoming more common, according to data assembled by the law firm Cooley LLP. The figure below shows the share of venture capital agreements for which Cooley provided the legal work in which drag along rights were included. While the proportion of agreements with drag along rights never exceeded 50 percent before 2006, it has never fallen below 50 percent since then. And since the second quarter of 2009, it has exceeded 60 percent in every three month period measured.
To read the full, original article click on this link: Drag Along Rights Are Now Commonplace
