Why lock-up period matters to a first-time founder
The period determines when founders, employees or investors may gain liquidity from restricted holdings. Its expiry can affect personal planning and market supply, but founders should not assume they can sell immediately. Other contractual, regulatory or trading-window restrictions may still apply.
Examples of lock-up period
A founder’s shares are locked up for 180 days after an IPO. On day 181 the contractual period ends, but the founder checks the company’s dealing policy and applicable securities rules before trading because unpublished price-sensitive information may still prevent a lawful sale.
Common misunderstanding
Expiry does not guarantee a sale or remove every restriction. Vesting, transfer approvals, securities laws and insider-dealing rules may continue. The period also need not start at signing; the agreement may measure it from closing, listing, issuance or another specified event.
When to use it
Use the term when planning transactions, cap-table liquidity or communications around a restriction’s start and end. Record the triggering event, calculation method, exceptions and waiver rights. Confirm all overlapping rules before any transfer, particularly near an IPO or results announcement.