---
title: "What Is Lock-Up?"
term: "Lock-Up"
description: "A lock-up is a contractual restriction preventing shareholders from selling shares for a set period — most famously after an IPO, when insiders agree not to trade for typically 90 to 180 days."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["venture-capital"]
source: https://venturecapitaltracker.com/glossary/lock-up
---

# What Is Lock-Up?

> A lock-up is a contractual restriction preventing shareholders from selling shares for a set period — most famously after an IPO, when insiders agree not to trade for typically 90 to 180 days.

**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](/glossary/lock-up-period)
- [Lockup Escrow](/glossary/lockup-escrow)
- IPO and insider trading rules

## FAQ

### What is Lock-Up in simple terms?

A lock-up binds holders not to sell or transfer shares until a date or event — standard after IPO for executives and investors to stabilize the stock.

### Why does Lock-Up matter?

Founders and employees should budget living expenses knowing liquidity is delayed. Stock can drop when lock-ups expire and selling pressure hits.


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Source: https://venturecapitaltracker.com/glossary/lock-up