IPO planning

Plan for your first post-IPO sale before the lockup expires.

Executives, founders, and early employees who adopt a 10b5-1 plan only after their IPO lockup lifts routinely discover they cannot sell for another 90 to 120 days. The cooling-off period that the SEC requires between plan adoption and the first trade applies regardless of when you adopt — and it does not run backward to cover the lockup period you already sat through.

The solution is to adopt during the lockup. When a 10b5-1 plan is adopted while the lockup is still in effect, the cooling-off period runs concurrently with the remaining lockup time. A director or officer who adopts 90 days before the lockup expires can, if the cooling-off calculation cooperates, have a plan that is ready to execute the moment the lock-up lifts. This guide shows you how to calendar that adoption, what Rule 144 adds on top, and the failure modes that push first sales further out than anyone planned.

What the IPO lockup actually restricts

The lockup period is a contractual restriction, not an SEC rule. It is a provision in the underwriting agreement between the issuer and the lead underwriters, and it applies to insiders, founders, early investors, and employees who received pre-IPO equity. Standard duration is 180 days from the IPO effective date, though some agreements use 90-day, 120-day, or tiered structures with partial releases.¹

During the lockup, covered holders agree not to sell, transfer, pledge, or hedge company shares — or enter into any arrangement that has the economic effect of a sale. A 10b5-1 plan is an arrangement to sell, but because no actual sale occurs until after the plan begins executing, adoption during lockup is permitted. What you cannot do is set the plan's first scheduled trade date to fall inside the lockup window.

The lockup is one layer. On top of it, newly public companies impose their own insider trading policies with post-IPO blackout periods and open-trading-window calendars. These are independent constraints and they do not evaporate when the lockup expires.

How the cooling-off period works alongside the lockup

Under SEC Release 33-11138 (effective February 27, 2023), directors and executive officers must wait the later of 90 days or two business days after the company discloses financial results for the fiscal quarter in which the plan was adopted, subject to a 120-day cap.² Rank-and-file employees with material nonpublic information access but no officer or director title face a 30-day cooling-off period.

The cooling-off clock starts on the adoption date. It does not pause during the lockup, and it does not get a head start from time spent in lockup before you adopted the plan. But if you adopt the plan during lockup, the cooling-off clock runs concurrently with whatever lockup time remains.

Working backward from day 180 — the adoption calendar

The goal is to identify the latest date you can adopt during lockup and still achieve a first-sale date at or near lockup expiration. Work backward from the desired first trade date and account for three timing factors:

If you are an officer and want your plan ready at lockup expiration (day 180), you generally need to have the plan adopted by day 90 or earlier. Earlier gives you room for the earnings-date override. Here is a worked example:

Post-IPO trading windows and blackout periods

Newly public companies frequently impose a post-IPO blackout period — typically 28 to 30 days after the offering — while the underwriters complete market-stabilization activities and the company's compliance team stands up its insider trading program. This means the first open window after an IPO often does not open until late in month two.

After that initial window, newly public companies generally follow the same open-window pattern as seasoned issuers: windows open a specified number of days after the public release of quarterly earnings and close a specified number of days before the next quarter's earnings. These windows are often four to six weeks wide.

A 10b5-1 plan adoption must occur in an open trading window, when the adopting person does not possess material nonpublic information. Post-IPO, MNPI restrictions can be particularly acute — the company is a new reporting entity, every quarter's financials is material, and post-offering investor relations activity moves information around the company in ways that differ from its pre-IPO rhythm.

Practically, this means the first compliant adoption window at a newly public company is often the window following the first post-IPO earnings release — roughly 90 days post-IPO. If the lockup is 180 days, adopting in that first window (around day 90) and waiting 90 cooling-off days puts the first-permitted-trade date at approximately day 180. The math works, but there is no margin for delays.

Rule 144 — the legal constraint that outlasts the lockup

The lockup is contractual and expires on a fixed date. Rule 144 is a federal securities law exemption that applies indefinitely to affiliates — directors, officers, and anyone else who controls the issuer through policy influence — and that imposes its own conditions on every stock sale, regardless of whether the lockup has expired.

Holding period for restricted securities

Most pre-IPO equity — founders' shares, pre-IPO option exercises, shares issued under pre-IPO plans — is classified as restricted securities. The Rule 144 holding period for restricted securities issued by an SEC reporting company is six months from the date on which the company became fully subject to SEC reporting requirements, which is generally the IPO effective date.³ For founders and long-tenured employees who received shares years before the IPO, the six-month holding period is typically satisfied by the time the lockup expires. Confirm this for your specific grant dates.

Affiliate volume limits

Even after the lockup expires and the holding period is satisfied, affiliates may sell only the greater of 1% of the company's total outstanding shares or the average weekly trading volume over the four calendar weeks preceding the sale — measured across all markets — in any three-month period.³

For a company with 150 million shares outstanding, the 1% threshold is 1.5 million shares per quarter. For large-cap companies with high trading volume, the average-weekly-volume measure often gives more headroom. Model both before finalizing a sale cadence in the plan — a cadence that exceeds the volume cap will be rejected by the broker at execution time.

Manner of sale and Form 144

Affiliates must sell through a broker transaction or directly to a market maker. The selling person may not solicit orders. If the planned sales in a 90-day period will exceed 5,000 shares or $50,000 in aggregate value, a Form 144 must be filed electronically on EDGAR concurrently with the placement of the sale order.³ A 10b5-1 plan does not eliminate the Form 144 requirement — the broker will handle filing, but confirm this in writing before plan execution begins.

For detailed coverage of how Rule 144 and a 10b5-1 plan interact throughout the plan's life, see the Rule 144 coordination guide.

Common failure modes after IPO lockup expiration

Pre-lockup expiration planning checklist

• Identify the first post-IPO open trading window. Factor in the post-offering blackout and the company's insider trading policy. Confirm the open date with the general counsel or compliance officer.
• Adopt the plan in the first window that places you ≥90 days (officers/directors) or ≥30 days (others) before your target first-sale date. For a day-180 first sale, target adoption around day 60–90 of the lockup.
• Model the earnings-date override. Determine when the company will file its next 10-Q or 10-K relative to your planned adoption date. Calculate whether that pushes your cooling-off endpoint past the 90-day mark.
• Allow 2–4 weeks for broker and company processing. Submit plan documentation well before the window closes, not during the final week.
• Verify your holding period for restricted securities. Confirm the IPO effective date and your grant dates to ensure the Rule 144 six-month clock is satisfied before your first planned sale.
• Model the Rule 144 volume headroom. Calculate your plan's per-quarter share count against both the 1%-of-outstanding and 4-week-average-trading-volume limits. Do not schedule more than either cap allows.
• Confirm Form 144 workflow with your broker. Establish who files, when, and how — before the first execution date.
• Check for MNPI before adoption. Assess your information state with securities counsel before adopting, particularly if you have been involved in post-offering investor relations, strategic planning, or financial review activity.

For the underlying plan mechanics and SEC rule framework, see the 10b5-1 plan rules overview and cooling-off period guide. For Section 16 reporting obligations that apply to officers and directors throughout this process, see Section 16 and Form 4 reporting. For step-by-step plan adoption guidance, see the pre-adoption checklist.