IPO Lock-Up Periods

What happens to your pre-IPO shares once the company actually goes public — and when you can finally sell.

Last reviewed on 27 April 2026

You bought shares of a private company a few years ago. Today the S-1 lands, the underwriters set the price, and the stock starts trading. You should be able to sell now, right?

Almost certainly not. Nearly every IPO comes with a lock-up agreement that prohibits insiders, employees, and pre-IPO investors from selling for a defined period after the offering. Lock-ups exist because underwriters need confidence that early holders will not flood the market on day one and crush the stock. They are also one of the most reliably mispriced features of going public — newer investors underestimate the lock-up's effect on their realised returns.

This page covers how lock-ups work, who they apply to, when they end, and what tends to happen to the share price around expiry. It is the natural follow-on to our how-to-sell guide and the tax-implications guide.

What an IPO Lock-Up Is

An IPO lock-up is a contractual agreement, signed before the offering, in which a defined group of shareholders agrees not to sell their shares for a defined number of days after the IPO closes. The standard lock-up window is 180 days, although recent offerings have used windows ranging from 90 to 365 days, sometimes with stepped releases.

The lock-up sits in two different documents simultaneously:

  • The underwriters' lock-up agreement — a contract between each restricted holder and the lead underwriters.
  • The company's prospectus — public disclosure that summarises the lock-up's scope and terms for the broader market.

The underwriters can release a holder early. Their bias is normally to keep the lock-up intact: the whole point is to protect the offering's price. But early releases happen, especially for charitable distributions, family transfers, and pre-arranged 10b5-1 plans.

Who Is Subject to a Lock-Up

The exact list is in the prospectus. The standard cast:

  • Founders and senior executives.
  • Directors, including independent directors with token holdings.
  • Pre-IPO investors — venture firms, growth investors, family offices, secondary-market investors.
  • Employees who have exercised options or received vested RSUs by the IPO date.
  • SPVs and forward contracts that hold the company's stock — even though you, the underlying investor, are once removed.

Holders of unexercised options and unvested RSUs are not "locked up" in the contractual sense — they have nothing to sell yet — but the same restrictions apply once they vest if those events fall inside the lock-up window.

Lock-Up Timeline

A typical lock-up timeline looks like this:

  1. S-1 filing. The company files its registration statement with the SEC. Lock-up terms are summarised in the prospectus.
  2. Roadshow. Underwriters and management market the offering. Lock-up agreements are signed during this stretch.
  3. Pricing and IPO date. Stock starts trading. Day 1 of the lock-up.
  4. Lock-up window. Typically 180 days. Some companies disclose early-release triggers tied to share-price targets sustained for a defined number of days.
  5. Lock-up expiry. Restricted shareholders are free to sell, subject to securities-law restrictions like Rule 144 for affiliates.
  6. Earnings blackouts. Even after lock-up, insiders are subject to the company's quarterly trading blackout windows.

Lock-Up vs Rule 144

The lock-up is contractual; Rule 144 is statutory. They overlap and can both apply.

  • Rule 144 is the SEC rule that lets holders of restricted or control securities sell into the public market without registration, subject to a holding period (typically six months for shares of an SEC-reporting company), volume limits for affiliates, and Form 144 filings.
  • For most pre-IPO holders, the contractual lock-up is the binding constraint during the first 180 days. After that, Rule 144 becomes the binding constraint for affiliates.
  • Non-affiliates (defined in Rule 144 as people without control influence) usually have unrestricted resale once the lock-up clears, provided their holding period is met.
  • Affiliates — officers, directors, and 10%+ holders — face ongoing volume caps (1% of outstanding shares per quarter) and Form 144 filings even after the lock-up.

For the affiliate-vs-non-affiliate split, the holding-period mechanics, and a worked example across three holder types, see our dedicated Rule 144 and restricted-stock resale guide.

Early-Release Mechanics

Some IPOs disclose explicit early-release triggers in the prospectus. The most common patterns:

  • Price-based release. If the stock closes above a threshold (often 33% above the IPO price) for a defined number of trading days inside an earnings window, a tranche of shares unlocks early.
  • Earnings-event release. A portion of shares unlocks one or two trading days after the company's first or second post-IPO earnings release.
  • Stepped release. Different tranches unlock at different dates — for example, 20% at day 90, the remainder at day 180.

Companies use these structures to spread selling pressure across more time and avoid the cliff at day 180. Pre-IPO holders who plan around them can avoid the worst of the supply shock.

What Tends to Happen Around Expiry

Lock-up expiry is one of the most-studied calendar events in equity markets. The pattern across many post-2010 IPOs:

  • The stock often weakens in the days leading up to expiry, as anyone who can hedge does.
  • The day-of supply shock tends to be smaller than expected because much of it is already priced in. The first few trading days post-expiry can swing either way.
  • For high-multiple, high-momentum IPOs, the realised drawdown around expiry has historically been larger than for value-priced offerings.
  • Companies with stepped releases tend to see less concentrated price action than those with cliff lock-ups.

None of this is a forecast. It is a baseline expectation that some early holders fold into their selling plans. Treat lock-up expiry as a significant calendar event, not as a single trade idea.

Planning a Post-Lock-Up Sale

If you hold pre-IPO shares heading into a known IPO, the planning starts months before the offering, not after.

Before the IPO

  • Confirm with the company's legal team or your broker which lock-up terms apply to your specific holding (direct shares, options, RSUs, SPV interest, forward contract).
  • If you hold concentrated equity, consider a 10b5-1 trading plan — a pre-arranged selling schedule that, once in place during an open window, can execute even during blackouts. The SEC requires a cooling-off period of generally 90 days between adoption and first trade, and longer for officers and directors, so plan early.
  • Coordinate with your tax advisor. Selling a large block in the first calendar year after IPO can collide with AMT, QSBS holding periods, and state-tax thresholds. The tax-implications guide covers the major interactions.

During the Lock-Up

  • Stay informed about early-release triggers and any company communications that move the dates.
  • If the stock has run up materially, consider hedging strategies that are permitted under your lock-up — many lock-ups prohibit hedging during the window, so check.
  • Monitor cash needs. Lock-up holders sometimes need bridge liquidity for tax bills triggered by exercise events; non-recourse loans against locked-up stock exist but are expensive.

After Expiry

  • Execute against the plan you wrote before the IPO — calmly, regardless of where the stock is trading.
  • Be aware of the company's first earnings blackout window post-lock-up. Restricted holders who become affiliates after the IPO should plan around it.
  • Track each tranche's basis and holding period meticulously. Mixed lots from option exercises across multiple years are a common source of cost-basis errors.

Held Through an SPV or Forward?

If your exposure runs through an SPV or a forward contract, the lock-up does not vanish — it just moves up the chain.

  • SPV holders. The SPV is the locked-up entity. The SPV's manager decides when to sell after expiry, on what schedule, and in what manner. You receive distributions according to the SPV's operating agreement.
  • Forward contracts. The seller (typically an employee) is the locked-up holder. Whatever liquidity the buyer receives flows through whatever mechanism the contract specified — cash settlement after the seller's lock-up clears, share delivery at expiry, or something else.

For more on these wrappers, see the SPVs and forward contracts page.

Common Mistakes

  • Treating the lock-up as a generic "180 days." Read the prospectus. Stepped releases, price-based releases, and per-holder carve-outs make every lock-up specific.
  • Assuming day-180 is the bottom. Sometimes it is, sometimes it is not. Plan for either outcome.
  • Skipping the 10b5-1 plan. Without one, blackout periods will erase whole quarters of selling opportunity for affiliates.
  • Ignoring the AMT collision. Exercising ISOs the year of an IPO and then selling locked-up shares in a different year is a classic disqualifying-disposition trap.
  • Forgetting state tax. Pre-IPO shares earned in California typically remain subject to California source rules even after a move.

Bottom Line

Going public is not the moment of liquidity for most pre-IPO holders. It is the start of a defined waiting period that ends with a more complicated tax landscape, a different securities-law regime, and — in many cases — a stock price that has already absorbed expectations of supply. Plan for the lock-up before the S-1 is filed, document the structure that applies to your specific holding, and use the months between to build the selling plan you will actually execute on day 181.