Lock-Up Option

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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.

INVESTOPEDIA EXPLAINS '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.

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