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Lock-up agreements are crucial legal contracts that maintain stock price stability after significant corporate events such as IPOs, mergers, or acquisitions. These agreements prevent company insiders from selling their shares for a defined period, reducing market volatility and reinforcing investor confidence.

The purpose of an IPO lock-up period is to prevent insiders from inundating the market with large numbers of shares as they become public, which could initially depress the stock's price.

up agreement is a legally binding contractual provision that prohibits company insiders from selling their shares in a company for a specific period of time. These contracts are usually used during the initial public offering process to prevent excessive selling of stocks in the first few months of trading.

up agreement is a contractual provision preventing insiders of a company from selling their shares for a specified period of time. They are commonly used as part of the initial public offering (IPO) process.

Key Takeaways An IPO lock-up is period of days, typically 90 to 180 days, after an IPO during which time shares cannot be sold by company insiders. Lock-up periods typically apply to insiders such as a company's founders, owners, managers, and employees but may also include early investors such as venture capitalists.

In other words, the shares are "locked up." Before a company goes public, the company insiders and its underwriter typically enter into a lockup agreement to ensure that shares owned by these insiders don't enter the public market too soon after the offering.

Typically, lockup periods last between 90 and 180 days. Lockup periods are important for investors to monitor because the supply of stock available in the public market (known as the float) can increase significantly once insiders begin selling.