What Is Lock-Up?

Lock-up is the no-sell period written into IPO and some M&A deals — shareholders have paper wealth but cannot trade yet.

How it works

Underwriters require insiders and major pre-IPO investors to sign lock-up agreements, often 180 days post-IPO, sometimes with early release if conditions are met. Lock-up expiry dates cluster; traders watch supply hitting the market.

Private acquisitions may lock sellers with earn-outs or holdbacks. Token projects use on-chain vesting locks similarly.

Why it matters

• Founders: Plan taxes and personal finance before IPO announcement — liquidity follows lock-up release, not ringing the bell.
• Investors: Public entry after IPO must respect lock-ups on insider shares; secondary supply forecasts affect post-list trading.

Underwriters may release lock-ups early if the stock performs well and market conditions support additional supply — not guaranteed. Rule 144 volume limits still apply to affiliates after lock-up ends.

SPAC and de-SPAC transactions use different lock-up terms for sponsors and PIPE investors — read each tranche separately.

Common mistake

Assuming all shareholders share the same lock-up. Employees, VCs, and founders may have different release schedules.

Practical takeaway

Build personal financial plans assuming no sales until lock-up expiry unless you have a pre-approved 10b5-1 plan. Paper wealth at IPO is not spendable cash — tax withholding on RSU releases is a separate cash need from lock-up timing. Coordinate with wealth advisors on concentrated stock strategies before the restriction ends.

Related ideas

• Lock-Up Period
• Lockup Escrow
• IPO and insider trading rules