What is Lock-Up Period?
Lock-Up Period
A Lock-Up Period is a contract window (typically 180 days) after an IPO during which company insiders, founders, and early investors are prohibited from selling their shares.
Detailed Deep Dive
Lock-Up Periods prevent insider share sales immediately following an IPO, stabilizing stock pricing before insider liquidity window opens.
Frequently Asked Questions
Q:Why do underwriters enforce a lock-up period?
To prevent a mass sell-off of insider shares from flooding the market and crashing the stock price right after listing.
Q:Who is subject to the lock-up period?
Founders, directors, early venture capital firms, and employees holding stock options.
Quick Facts
- CategoryLegal
- Key ApplicationPost-IPO liquidity planning and stock price stabilization
Coverage Trend12 Weeks
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