At the time of filing the registration statement,
the underwriters will want to make sure that
highly visible employees and shareholders of the company
do not sell their shares for a period of time after the IPO
This is generally done to allow an orderly
trading market to develop without additional shares being
dumped into the market. To make sure that this occurs,
the underwriters will most likely require that the officers,
directors, large shareholders, and other listed management
enter into a lock-up agreement whereby such shareholders
agree not to sell or otherwise transfer their shares for
a certain period of time.
The duration of the lock-up agreement is typically 180 days,
but can range in its duration from 90 days to one year.