The lock-up is the reason an IPO does not turn your shares into spendable cash on day one. It is a deal term negotiated between the company and its underwriters, not a rule set by the SEC, which means the exact length and exceptions depend on your company’s paperwork. This post covers what a lock-up is, how long it typically runs, what it restricts, and how it differs from other post-IPO restrictions.
What is a lock-up period?
A lock-up period is an agreement, signed by insiders and enforced through the underwriters of the IPO, that bars them from selling or transferring company shares for a defined window after the offering. Insiders usually include founders, executives, employees, and early investors. The purpose is to keep a large volume of insider shares from hitting the market right after the stock starts trading.
How long does a lock-up last?
The industry standard is 180 days, or roughly six months, from the IPO date. Agreements range from about 90 days to a full year, and the length is negotiated for each offering. Some companies now use staged or conditional releases. A January 2025 review by the law firm Cooley found that every 2024 IPO with a staggered release included a performance condition, with price thresholds ranging from 20% to 50% above the IPO price. It also noted that several tech IPOs, including Reddit, Airbnb, and OneStream, shortened the lock-up to expire after the second earnings release, at least 120 days after pricing, and that Unity and Allbirds let employees sell up to 15% of their shares at listing. Your company’s lock-up terms are in the IPO paperwork and in any market stand-off clause in your option or stock agreements.
Who is covered by the lock-up?
Typically every insider who holds shares, vested options, or other equity at the time of the IPO, including rank-and-file employees. Many option agreements and company stock plans also include a market stand-off provision, a clause in which you agree in advance not to sell for a period after an IPO, usually matching the underwriters’ lock-up. Some lock-ups carve out limited exceptions, such as transfers to family trusts or sales to cover taxes, but those exceptions are written into each agreement and are not universal.
Does the lock-up stop me from exercising options?
Usually not. A lock-up restricts selling and transferring shares, not buying them by exercising. But it means shares you acquire by exercising are generally also locked up, and a sale to cover the exercise cost or the tax bill may not be permitted until the lock-up ends unless the agreement carves it out. That makes the funding of an exercise during a lock-up a practical question to check with your equity administrator.
How is a lock-up different from a quiet period or a trading window?
They restrict different things. A lock-up restricts your selling for a set time after the IPO. A quiet period restricts what the company can say publicly around the offering. A trading window is a recurring period set by a public company’s insider trading policy, often closing around quarterly earnings, during which employees may not trade at all. After the lock-up expires, you can still be blocked by a closed trading window, which is why some employees use a pre-arranged Rule 10b5-1 trading plan to schedule sales in advance.
What happens when the lock-up expires?
Shares become eligible to be sold, subject to securities rules and your company’s trading policies. Research on lock-up expirations has generally found that stock prices tend to dip around the expiration date on average, with larger effects in venture-backed companies, though results vary widely by company and period. A study of 2,529 firms from 1988 to 1997 found significant negative average returns around expiration, concentrated in venture-backed firms. A more recent analysis by the investment firm NISA, published in July 2026, looked at 543 common stock IPOs from January 2019 to December 2025 and found that shares underperformed the S&P 500 by an average of 20.4% between the first-day close and the lock-up release date, which it attributes to investors selling ahead of the expected new supply. These are averages across many IPOs, not a prediction for any one stock.
Worked example
Say your company’s IPO prices on March 1 with a standard 180-day lock-up. You hold 12,000 shares from earlier exercises.
Lock-up expiration: about August 28 (180 days after March 1)
Before that date: you cannot sell any of the 12,000 shares, even if the stock rises sharply
If the agreement has a staged release: part of the 12,000 might unlock earlier, for example after the first earnings report, depending on the terms
After the date: the shares can be sold if no trading window or insider-information restriction applies, so the first practical selling day could be later than August 28
FAQ
How long is the lock-up after an IPO? Typically 180 days. Range: about 90 days to one year, set by agreement between the company and its underwriters.
Can I sell any shares during the lock-up? Generally no, unless your agreement includes a specific exception, such as an early release tied to a trigger or limited transfers to family trusts.
Does the lock-up apply if I already left the company? Often yes, if you still hold shares subject to a market stand-off or signed a lock-up agreement, though terms vary. Check your own documents.
Is the lock-up the same as a trading window? No. The lock-up is a one-time restriction after the IPO. Trading windows are recurring restrictions under a public company’s insider trading policy.
Do I have to pay taxes during the lock-up? If you exercised options or had shares vest during that time, tax can be due regardless of whether you can sell. That is a cash-flow question worth planning for in advance.
What to do next
Your actual lock-up length and any early-release terms are in your company’s IPO documents and your own grant agreements, not in industry averages. You can model your own numbers at movewealth.io.
MoveWealth is not a broker-dealer, investment adviser, or lender. This is educational content, not financial, tax, or legal advice. Consult a qualified professional about your specific situation.