What is a lock-up period and why is it important?

What is a lock-up period and why is it important?

A lock-up period is a period of time after an IPO during which insiders, such as company executives and large shareholders, are prohibited from selling their shares. The length of the lock-up period can vary, but is typically between 90 and 180 days. Lock-up periods are important because they help to prevent a flood of insider selling that could depress the stock price shortly after the IPO.