Lock-Up
Investment Banking glossary · Restructuring (RX), DCM, & ECM
Definition
180-day post-IPO restriction on insider share sales.
Lock-Up in plain English
When a company first sells its shares to the public (an IPO), the founders and early insiders usually own a huge pile of stock. A lock-up is a promise that, for about 180 days, those insiders CAN'T sell their shares. The point is trust: if insiders could dump everything on day one, it would crash the price and signal they don't believe in the company, so this cooling-off period reassures new investors that the people running things are sticking around.
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