Lockup Period
Private Equity glossary · Private Equity Fundamentals
Definition
Time after IPO during which pre-IPO holders cannot sell shares, typically 180 days.
Lockup Period in plain English
When a company first sells its shares to the public (an IPO), the early insiders — founders, employees, and early investors — are usually forbidden from selling their own shares for a set stretch of time, typically about 180 days. That waiting window is the lockup period, and its whole purpose is to prevent insiders from dumping their stock on day one, which would crash the price and signal that even they don't believe in it. Think of it as a 'no cashing out yet' rule that forces the people who know the company best to keep skin in the game while new public investors settle in. When the lockup finally expires, a wave of insider selling can sometimes push the stock down.
Learn these first
Related Private Equity terms
Private Equity practice questions · Private Equity flashcards · Private Equity study guide