Why do IPO's (Facebook) have multiple lockout periods? In the news people are saying FB shares were all time lows because of the 1st lockout period, and I think they have a further 2 more lockout persiods to come.
1. So why have multiple lockout periods (Who says I want 3 lockout periods) ?
2. Who determines how long the lockout periods are ?
The answer lies with the IPO organizing banks and reads simply "RISK"
The banks organize the IPO, and calculate a stable price development after the IPO.
So the programmed lockout periods (here FB) are made in reverse sort of risk aversion:
1st lockout: for the involved banks (they hate the higher risk over time)
2nd lockout: for employees (they have to stay and guarantee for the ongoing business and do have little rights for the IPO)
3rd lockout: for the second half of their stocks (highest risk). The first half they already sold
for the guaranteed IPO price on IPO day.
Each IPO is differently organized - so the strongest partners dictate if or how many lockouts and their periods will be.
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