While drag-along rights are meant to force minority shareholders' hands in helping close a pending deal, they are not infallible and can be blocked to an extent by minority owners.
Ways in which a drag sale can be blocked or postponed by minority owners include:
- Demanding a guaranteed minimum price.
- Demanding approval from the board of directors before the sale or merger can be completed.
- Forcing a black-out period to prevent transactions from being completed.
Drag-along rights allow majority shareholders to force minority shareholders into selling their shares in situations such as mergers and acquisitions. However, certain conditions must be in place for majority shareholders to enforce them. Minority shareholders also have some ability to block or postpone their enforcement.