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An Analysis of Shareholder Agreements

  • Chemla, Gilles
  • Habib, Michel Antoine
  • Ljungqvist, Alexander P.

Shareholder agreements govern the relations among shareholders in privately-held companies, such as joint ventures or venture capital-backed …rms. We provide an explanation for the use of put and call options, pre-emption rights, drag-along rights, demand rights, tag-along rights, and catch-up clauses in shareholder agreements. We view these clauses as serving to preserve the parties’ incentives to make ex ante investments when ex post renegotiation may alter the parties’ shares of the payoff. We extend our framework to discuss the use of other clauses, such as the option to extend the life of a business alliance.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3457.

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Date of creation: Jul 2002
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Handle: RePEc:cpr:ceprdp:3457
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