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are agreements that entitle one party, usually an outside or venture capital investor, to require other parties to the agreement, often founders, management and other company shareholders, to sell their stock in the company to a third party when the investor desires to sell its shares. Under the agreement, the party being "dragged along" receives the same consideration per share as the selling investor but does not control the timing or terms of the purchase. Sometimes referred to as "bring along agreements," these agreements enable their holders to deliver more than just their shares to a potential buyer. If the agreement includes all shareholders, the holder can deliver the entire company. If the agreement does not include all shareholders, the agreement may enable the holder to sell a controlling interest in the company. In either case, the drag along provision increases the holder's liquidity by providing it with additional tools with which to close a favorable sale of its interest. The essential element of every drag along agreement is the extraordinary ability it gives one party to force another party to sell its company shares at a time and on terms and conditions determined by the holder. Time limits and price limits are often added as conditions to exercise in drag along agreements, when they are agreed to at all. Because these agreements take from the "dragged" shareholder the basic right to determine when and under what conditions it will sell its stock, they are infrequently agreed to. When they are, careful consideration should be given to the terms and conditions under which they may be exercised. See: Co-Sale Agreements, Exits, First Refusal Rights, Liquidity Agreements, Tag Along Provisions.
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