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. White Knight

    A white knight is an individual or company that acquires a corporation ...
  2. Shark Repellent

    Slang term for any one of a number of measures taken by a company ...
  3. Lock-Up Agreement

    A legally binding contract between the underwriters and insiders ...
  4. Crown Jewels

    The most valuable unit(s) of a corporation, as defined by characteristics ...
  5. Hostile Takeover

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

    The combining of two or more companies, generally by offering ...
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  1. 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 >>
  2. 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 >>
  3. 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 >>
  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 is the difference between derivatives and options?

    Options are one category of derivatives. Other types of derivatives include futures contracts, swaps and forward contracts. ... Read Full Answer >>
  6. How are rights distributed in a rights offering?

    In a rights offering, rights are distributed to shareholders based on the number of shares they already own. What Is a Rights ... Read Full Answer >>

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