Lock-Up Period
Definition
Lock-Up Period: A lock-up period is a time after an IPO during which insiders (founders, employees, investors) cannot sell their shares, typically 180 days. It prevents a flood of shares from hitting the market immediately after IPO, which could crash the stock price.
Example Usage
“Despite our stock price doubling post-IPO, the 180-day lock-up meant I couldn't sell any shares.”
Common Misconceptions
Related Terms
IPO
An Initial Public Offering (IPO) is when a private company offers shares to the public for the first time on a stock exchange. IPOs provide liquidity...
Secondary Sale
A secondary sale is when existing shareholders sell their shares to other investors, rather than the company issuing new shares. This provides liquidi...
Vesting
Vesting is the process by which employees earn their equity over time. The standard vesting schedule is 4 years with a 1-year cliff, meaning no equity...
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