Lock-up period

A contractual restriction on specified holders’ share sales for a defined period, subject to its terms, exceptions and waivers. initial public offering (IPO) lockups commonly last 180 days, but duration and permitted sales vary.

Also called Lockup, Lock-up

Lock-up period in round numbers

Hypothetical: a sponsor sells existing shares equal to 20% of total post-IPO shares in the IPO and receives those secondary-sale proceeds before its costs. Its remaining shares are subject to the agreed lockup. If the issuer also sells new shares, those primary proceeds go to the issuer. Later sales or in-kind distributions of retained shares are distinct actions and are not guaranteed.

Source: SEC Investor.gov: IPO lockup agreements.

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