The primary purpose of a lockup agreement is to ensure

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A lockup agreement is a contract between a company and insiders, such as officers, directors, and employees who hold shares of the company, to prohibit them from selling their shares for a certain period of time after the initial public offering (IPO). The purpose is to ensure that these insiders maintain an economic interest in the company and avoid flooding the market with shares immediately after the IPO, which could drive down the share price. It is not specifically designed to ensure that the lead underwriter or the issuer of new securities maintains an economic interest, issues research reports, or guarantees a minimum amount from the issue. It also does not apply to investors purchasing shares at the offer price.

The Primary Purpose of a Lockup Agreement Is to Ensure