A lock-up period is a set window of time after an IPO, or certain private transactions, during which existing shareholders — including employees, founders, and early investors — are contractually restricted from selling their shares. It’s a deliberate speed bump, designed to prevent a wave of immediate insider selling from destabilizing a newly public stock.
For anyone holding shares heading into an IPO, the lock-up period is often the difference between “technically wealthy on paper” and “able to actually sell anything,” which makes it one of the more closely watched dates on a startup employee’s calendar. Lockup periods are described in a company’s S-1.
Lock-up periods are standard practice in IPOs, typically lasting 90 to 180 days after the company goes public. They’re designed to prevent a flood of insider selling immediately after the IPO, which could depress the stock price and signal a lack of confidence to new public shareholders.
Example: An employee holding vested shares in a company that just completed its IPO cannot sell those shares on the public market until the lock-up period, commonly 180 days, expires, even though the stock is now technically tradable by the general public.
Underwriters typically negotiate lock-up terms directly with the company, its founders, and early investors as part of the IPO process. Some agreements include partial early releases or staggered expirations rather than a single hard deadline, allowing a portion of shares to become sellable before the full lock-up ends.
When a lock-up period expires, previously restricted shareholders become free to sell, which can increase available trading supply and sometimes creates short-term price pressure on the stock — a pattern investors often watch for around known lock-up expiration dates.
A lock-up period doesn’t change what a share is worth, but it does change when a shareholder can actually turn that value into cash. Tracking lock-up expiration dates is a routine part of post-IPO planning for both employees and investors watching the stock.
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Disclaimer
This content is for informational and educational purposes only. It does not constitute investment advice, legal advice, or a recommendation to buy or sell any security or to pursue any specific investment strategy.
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Paul leads editorial at Augment, building Pulse into the private markets' go-to intelligence source. He also develops editorial content strategies for startups and venture capital firms. Previously, he spent 15 years as a business and opinion journalist at The New York Times, Fortune, Fast Company, Reuters, and more. He believes transparency creates liquidity—and that someone should actually publish what private shares are trading for. He lives in Marin with his wife and two rescue dogs, and wishes he had more time to surf.
Learn moreYes. Some private secondary transactions and tender offers also include lock-up provisions restricting resale for a period of time.
In some cases, underwriters and companies can agree to extend a lock-up if market conditions are volatile around the original expiration date, though this isn’t the norm.
Because previously restricted shareholders can suddenly sell, increasing available supply, which can create downward price pressure if a meaningful number of them choose to sell at once.
Not always. Some agreements stagger release dates for different shareholder groups rather than releasing every restricted share on the same single day.
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