IPO Lock-Up

IPO Lock-Up
A contractual caveat referring to a period of time after a company has initially gone public, usually between 90 to 180 days. During these initial days of trading, company insiders or those holding majority stakes in the company are forbidden to sell any of their shares. Once the lock-up period ends, most trading restrictions are removed.

Also referred to as "lock-up period".

An IPO lock-up is done so that the market is not flooded with too much supply of a company's stock too quickly. Typically, only 20% of the outstanding shares are initially offered to the investing public. A single large shareholder trying to unload all of his holdings in the first week of trading could send the stock downward, to the detriment of all shareholders.

There is also empirical evidence suggesting that after the end of the lock-up period, stock prices experience a permanent drop of about 1-3%.


Investment dictionary. . 2012.

Игры ⚽ Поможем решить контрольную работу

Look at other dictionaries:

  • Lock-Up Period — Window of time in which investors of a hedge fund or other closely held investment vehicle are not allowed to redeem or sell shares. The lock up period helps portfolio managers avoid liquidity problems while capital is put to work in sometimes… …   Investment dictionary

  • Pre-IPO Placement — When a portion of an initial public offering (IPO) is placed with private investors right before the IPO is scheduled to hit the market. Typically, these private investors in a pre IPO placement are large private equity or hedge funds that are… …   Investment dictionary

  • Cold IPO — Unter einem Börsengang, engl. Initial Public Offering oder kurz IPO (früher auch „Going Public“ genannt) oder auch Primary Offering, versteht man das erstmalige Angebot der Aktien eines Unternehmens auf dem organisierten Kapitalmarkt. Die… …   Deutsch Wikipedia

  • World Online — During the dot com boom period of late 1990s, World Online (WOL) was one of the leading characters on the European stage.Founded by Dutch entrepreneur Nina Brink, World Online was an Internet Service Provider (ISP) with aspirations for becoming… …   Wikipedia

  • Initial public offering — (IPO), also referred to simply as a public offering , is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large… …   Wikipedia

  • Börsengang — Unter einem Börsengang, (engl. initial public offering, abgekürzt IPO oder stock market launch ), versteht man das erstmalige Angebot der Aktien eines Unternehmens auf dem organisierten Kapitalmarkt. Die Abwicklung des Börsengangs wird in der… …   Deutsch Wikipedia

  • Agricultural Bank of China — Limited Type Public Traded as SEHK: 1288 SSE …   Wikipedia

  • Hedge fund — A hedge fund is a private investment fund open to a limited range of investors which is permitted by regulators to undertake a wider range of activities than other investment funds and which pays a performance fee to its investment manager.… …   Wikipedia

  • After-Market Performance — The price level performance of a newly issued stock after its IPO. There is no standard ending time period that is considered, but after market performance begins on the first day of trading on the exchange. Typically after market performance… …   Investment dictionary

  • Reverse takeover — (reverse IPO) is the acquisition of a public company by a private company to bypass the lengthy and complex process of going public. The transaction typically requires reorganization of capitalization of the acquiring company.ProcessIn a reverse… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”