IPO Lock-Up

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IPO Lock-Up

A practice in a publicly-traded company that forbids management and large stockholders from selling their shares for a period of time following an initial public offering. Depending on the company, the IPO lock-up usually lasts 90 to 180 days. It exists to ensure that the market is not flooded with shares in the company at any given time, which would increase supply and cause a drop in price. Large shareholders selling their shares may also be seen as equating to a lack of confidence in the company, triggering a panic sell.
References in periodicals archive ?
5 million shares that were subject to the IPO lock-ups but which will not be subject to the new lock-ups will become tradeable on January 31, 2006.
The IPO lock-ups of the shareholders of the founding companies expire on May 26, 1999, and the remaining IPO lock-ups, including those with respect to investors in the sponsor entities, Capstone Partners, LLC, and Alpine Consolidated II, LLC, expired last week.
Bookham Technology believes that undertaking the secondary offering will facilitate three objectives: increased trading liquidity in its shares, broader ownership of its shares and the orderly management of the expiry of IPO lock-ups.