Lock-up period

Lock-up period. A lock-up period is the time during which you cannot sell an investment that you own.

You are most likely to encounter a lock-up period if you acquire shares in an initial public offering (IPO) because you had a private equity investment in the company before it went public and receive shares in the IPO proportionate to your private equity ownership interest.

You may also have a lock-up period if you are an owner or an employee of the company and are granted shares.

The lock-up period may last as long as 180 days. In some cases, though, the lock-up period is graduated, meaning that after the initial 180 days you can sell an increasingly larger portion of your shares over the next two years.

After the lock-up period ends, you are free to sell all your shares if you wish.