Post-IPO Lock-up Expiry: Market Impact and Issuer Communication

The expiry of post-IPO lock-up periods — typically 6 months for controlling shareholders and cornerstone investors — is a predictable but often mishandled corporate event. Market data shows a median share price decline of 2-4% in the two weeks preceding lock-up expiry, as the market prices in the probability of sell-downs by pre-IPO shareholders. Issuers can manage this event through three mechanisms. First, proactive disclosure: announcing the lock-up expiry date well in advance and providing context about which shareholders are subject to expiry and their stated intentions (to hold, to sell a portion, or undecided). Second, block trade facilitation: arranging for banks to execute one or more block trades on the expiry date, allowing selling shareholders to exit in an orderly manner rather than through fragmented open-market sales. Third, voluntary extension: encouraging key shareholders (particularly founders and management) to voluntarily extend their lock-up by a further period, signaling confidence. The worst approach is silence — when the market does not know whether a 15% shareholder intends to sell, it prices in a worst-case scenario.