Lock-Up Option


DEFINITION of 'Lock-Up Option'

A stock option offered by a target company to a white knight for additional equity or for the purchase of a valuable portion of their company.

BREAKING DOWN 'Lock-Up Option'

An undesired third party is deterred from acquiring a major portion of the target company due to the very high value of the lockup option.

Also known as Lock-Up Defense.

  1. Shark Repellent

    Slang term for any one of a number of measures taken by a company ...
  2. White Knight

    A white knight is an individual or company that acquires a corporation ...
  3. Lock-Up Agreement

    A legally binding contract between the underwriters and insiders ...
  4. Merger

    The combining of two or more companies, generally by offering ...
  5. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  6. Crown Jewels

    The most valuable unit(s) of a corporation, as defined by characteristics ...
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    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  2. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  3. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
  4. How can an investor profit from a fall in the utilities sector?

    The utilities sector exhibits a high degree of stability compared to the broader market. This makes it best-suited for buy-and-hold ... Read Full Answer >>
  5. What are the main risks associated with trading derivatives?

    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>
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