# kaal:claim:3017612-025

**Claim.** Drag-along rights raise the price the majority can obtain because a buyer facing the prospect of continuing with remaining minority shareholders would otherwise discount its offer for the majority stake.

**Type.** mechanism  **Support.** argued

**Holds when.**

- sale of a majority stake in a closely held corporation

**Source quote.**

> Drag-along rights allow majority shareholders to maximize the chance of receiving full value for their shares because the prospect of having to work with the remaining minority shareholders may lead an interested party to offer a discounted price for the majority stake.

**From.** Wulf A. Kaal, *Shareholder Agreements - National Report of the United States of America* (2017), III.2 Shareholders' Agreements on the (Limitation for the) Transfer of Shares, page 12

**Cite as.** Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612

**Verify.** sha256 of source PDF `33821db406f92efbe1698fbaed37687595c13b7ce5463b4a879df679fd4af1ac` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202017%20-%20Shareholder%20Agreements%20-%20National%20Report%20of%20the%20United%20States%20of%20America.pdf

**Topics.** institutional-design

**Keywords.** drag-along, control-premium, exit-rights, buy-sell-agreements

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