Lock-Up Period

A lock-up period is a contractual agreement between a company and its investors that restricts the sale of the company's shares for a certain period of time. This period typically lasts for 180 days after an initial public offering (IPO) or other major event, such as a merger or acquisition. During the lock-up period, insiders, such as company executives, are prohibited from selling their shares. The purpose of the lock-up period is to prevent a sudden influx of shares on the market, which could cause the stock price to drop.