Lock Up Company Release For Free

In the case of an initial public offering (IPO), the underwriters will seek to obtain lock-up agreements from all, or substantially all, the existing securityholders for a period of 180 days, subject to some limited carve-outs.

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.

2 Length of Lock-Up Period. In the case of an initial public offering (IPO), the underwriters will seek to obtain lock-up agreements from all, or substantially all, the existing securityholders for a period of 180 days, subject to some limited carve-outs.

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.

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.

Lockup agreements prohibit company insiders?including employees, their friends and family, and large shareholders?from selling their shares for a set period of time after an IPO.

What Happens After the IPO Lockup Period? Once the IPO lockup period ends, insiders are allowed to sell their shares with few or no restrictions. Typically, this leads to a wave of selling activity ? at the end of an IPO lockup period, most stocks experience a prolonged price drop of 1-3%.