We provide an offline version of this dictionary and you can download it free now.
Home » Lock-up Period

Definition Of Lock-up Period:


Window of time in which investors of a hedge fund or other closely-held investment vehicle are not allowed to redeem or sell shares.
The lock-up period helps portfolio managers avoid liquidity problems while capital is put to work insometimes illiquid investments.The IPOlock-up is a common lock-up period in the equities market usedfor newly-issued public shares.IPO lock-ups typically last anywhere from 90 to 180 days after the first day of trading, and are in place to prevent shareholders with a large proportion of ownership (such as company executives) from flooding the market with shares during the initial trading period. It is not uncommon to see a lock-up period of two years or more for a hedge fund; the underlying investments of a hedge fund may be so illiquid that fund managers could take big hits by forcibly selling securities to meet the cash requirements of exiting investors.The lock-up period protects the majority of assets in the fund and allows portfolio managers to keep a lower amount of cash on hand.

Browse Law Terms By First Letter:

Home | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y | Z |