overhang investment & finance definition

A condition in the stock market in which a large number of shares of stocks of a particular company are expected to be sold in the near future, which likely will depress the share price. A large number of stock sales may occur when the lock-up period of an initial public offering expires or when a corporation that owns the stock of another company wants to liquidate that holding. The overhang may occur because the company is planning on issuing new shares in a follow-on stock offering. It also may occur because a company is planning to sell shares of another company that it acquired as an investment.