Ratchet and 'Tag along drag along clause" explanation?

CFA Level II
#1

Can someone explain the two terms in plain english. I tried memorizing them but when they show up on an item set its given me hard time to disitinguish from the two… How does a ratchet work? What is that tag-drag along clause?

Thanks

#2

ratchet is for management of target company that can increase its equity % if they meet performance targets set up by PE firm so if they perform they get rewarded

tag along is when there is an acquisition offer it should be also extended to manageemnt of target not only the main controlling shareholder (so not only the PE from what i understand)

#3

try to thing of ratchet that it kind of sounds like rocket. every rocket has to hit some target. it’s easy to remember this way the main idea behind this.

#4

thanks…