Tombstone

An advertisement in the financial press providing brief details of the amount and maturity of a recently completed bank facility. The names of the lead managers, co-managers, and managers are prominently displayed. It is customary for the borrower to pay for this advertisement, although they receive little direct benefit.
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Definition

A tombstone is an advertisement found in the financial press that provides a summary of the amount and maturity of a newly completed bank facility. It prominently displays the names of the lead managers, co-managers, and managers involved in the deal. Typically, the expense for this advertisement falls on the borrower, who gains minimal direct benefit from the publication.

Examples

  1. Corporate Bonds Issuance: When a corporation issues bonds, they may publish a tombstone ad in financial newspapers to announce the successful completion of the deal, listing key details and involved managers.
  2. Initial Public Offering (IPO): During an IPO, a company might use tombstone ads to formally announce the offering and highlight the participation of major investment banks and brokers.
  3. Syndicated Loans: A company obtaining a syndicated loan from a consortium of banks may publish a tombstone to detail the loan amount and maturity along with the participating institutions.

Frequently Asked Questions

Why is it called a “tombstone”?

The term “tombstone” likely arises from the straightforward, black-and-white nature of these advertisements, resembling the somber inscriptions found on actual tombstones.

Who typically pays for the tombstone ad?

The borrower typically bears the cost of placing the tombstone ad in the financial press.

What is the primary purpose of a tombstone ad?

The primary purpose is to formally announce the completion of a financial deal and to credit the financial institutions involved.

Do tombstone ads provide any benefits to the borrower?

While the direct benefits to the borrower are minimal, tombstones provide transparency in the market and offer credibility to the deal and those involved.

Where are tombstone ads usually published?

Tombstone ads are usually published in major financial newspapers and journals, such as The Wall Street Journal and Financial Times.

  • Syndicated Loan: A loan offered by a group of lenders, known as a syndicate, who work together to provide funds for a single borrower.
  • Initial Public Offering (IPO): The first sale of stock by a company to the public, often underwritten by one or more investment banks.
  • Prospectus: A legal document that provides details about an investment offering for sale to the public.
  • Lead Manager: The principal investment bank coordinating the issuance of stocks, bonds, or other financial assets.
  • Co-Manager: An investment bank that works alongside the lead manager to handle the issuance of securities.
  • Underwriter: A person or institution involved in the process of issuing securities, responsible for assessing risk and pricing the issuance.

Online References

Suggested Books for Further Studies

  • “Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions” by Joshua Rosenbaum and Joshua Pearl
  • “Principles of Corporate Finance” by Richard A. Brealey, Stewart C. Myers, and Franklin Allen
  • “The Practical Guide to Wall Street: Equities and Derivatives” by Matthew Tagliani
  • “Corporate Finance” by Stephen A. Ross, Randolph W. Westerfield, and Jeffrey Jaffe

Accounting Basics: “Tombstone” Fundamentals Quiz

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