Lockup Period

Also called: Lock-up period, IPO lockup

TL;DR

The post-IPO window, typically 90 to 180 days, during which insiders are contractually prohibited from selling their shares on the public market.

Lockup periods prevent post-IPO insider selling for a defined window, typically 90 to 180 days. The lockup gives the public market time to absorb the new stock without the price overhang of insider selling. When the lockup expires, share price often dips temporarily as insiders rebalance.

Lockups apply to founders, employees, and early investors. Some companies arrange staggered or graduated lockup releases to smooth the post-lockup trading impact. SPAC lockups have their own structure tied to the de-SPAC date.

Worked example

Post-IPO 6-month lockup expires May 14. In the days leading up to expiration, options and short interest spike; on the day, ~22% of the float becomes sellable. Many companies do an 'early release' covering 30% of the lockup at the Q1 earnings beat.

Common pitfalls

•Underestimating the personal financial planning needed before lockup expires.
•Failing to model post-lockup share-price dynamics.
•Letting lockup expiration coincide with earnings windows that worsen volatility.

When this shows up in a pitch deck

Lockup is a post-IPO topic; not pitched in the deck.

Related terms

IPO

Initial Public Offering, the first sale of a company's shares to public investors, transforming the company from private to publicly traded.

SPAC

A publicly listed shell company that raises capital to acquire and merge with a private company, offering an alternative route to the public markets.

Tender Offer

A company-organized program letting employees and early investors sell a portion of their shares back to the company or to outside investors at a set price.

Secondary Sale

A sale of existing shareholder stock (founders, employees, or early investors) to a new investor, providing partial liquidity before an IPO or acquisition.

Earnout

A portion of acquisition consideration paid only if the acquired company hits specified post-close performance milestones over a defined period.

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