Drag-Along / Tag-Along
Paired shareholder rights governing how a company gets sold — majority drag, minority tag.
Definition. Drag-along and tag-along are paired shareholder rights that govern how an Israeli company gets sold: drag-along lets a majority force minority holders to join a sale; tag-along lets minority holders join a sale on the same terms when a majority sells.
These twin provisions sit at the heart of every Israeli shareholders’ agreement. Drag-along protects an acquirer’s need for a clean 100% purchase by preventing holdouts from blocking a deal. Tag-along protects minority and employee shareholders by guaranteeing they can sell alongside, at the same price, if controlling holders exit. Together they shape how a Secondary Sale or full acquisition executes, and they interact with the Liquidation Preference stack to determine who can move, when, and at what price. For Israeli cap tables built through a Delaware C-Corp, these clauses are negotiated round by round and become decisive at exit.
