F
or the past couple of months, I’ve been exploring some of the more confusing terminology of VC term sheets. In my last post, I discussed “protective provisions,” which grant the investors the right to veto or block certain corporate actions. In today’s post I examine “drag-along” or “bring-along” provisions, which can be very tricky.
Drag-along provisions grant the investors the right to compel the founders and other stockholders to vote in favor of (or otherwise agree to) the sale, merger or other “deemed liquidation” of the company. Investors view such provisions as an important protection, particularly if they seek to exit their investment and sell the company for a price less than the amount of their liquidation preference.
To read the full, original article click on this link: Demystifying the VC term sheet: Drag-along provisions | VentureBeat
Author: Scott Edward Walker
