Tombstone

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

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.
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.
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

### Why is the term "tombstone" used for these financial advertisements? - [ ] Because they are made of stone - [x] Because they resemble the somber, straightforward nature of actual tombstones - [ ] Because they are used in graveyard funds - [ ] Because they signify the end of a financial deal > **Explanation:** The term "tombstone" is likely used due to the simple and formal black-and-white presentation of these ads, which resemble the somber inscriptions on tombstones. ### Who typically bears the cost of placing a tombstone ad? - [x] The borrower - [ ] The lead manager - [ ] The co-managers - [ ] The financial press > **Explanation:** The borrower typically pays for the tombstone ad, even though they gain minimal direct benefit from it. ### What kind of financial transactions are tombstone ads commonly associated with? - [ ] Personal loans - [ ] Cash transactions - [x] Syndicated loans, IPOs, and bond issuances - [ ] Credit card deals > **Explanation:** Tombstone ads are commonly used for announcing syndicated loans, IPOs, and bond issuances. ### What details are prominently displayed in a tombstone ad? - [ ] Only the name of the borrower - [x] Names of lead managers, co-managers, and the deal's maturity details - [ ] Borrower's social security number - [ ] Amount of time the deal took to complete > **Explanation:** Tombstone ads prominently display the names of the lead managers, co-managers, managers, and details about the sum and maturity of the deal. ### What is one of the purposes of a tombstone ad? - [x] To formally announce the completion of a deal and credit the involved financial institutions - [ ] To solicit funds for the next project - [ ] To declare bankruptcy - [ ] To advertise an open job position > **Explanation:** The primary purpose of a tombstone ad is to announce the completion of the financial deal and credit the involved parties. ### Which publication is least likely to feature a tombstone ad? - [ ] The Wall Street Journal - [x] People Magazine - [ ] Financial Times - [ ] Barron's > **Explanation:** People Magazine is unlikely to feature a tombstone ad as it does not focus on financial news. ### What is the primary benefit of a tombstone ad to financial institutions? - [ ] Increasing their stock prices - [x] Establishing credibility and transparency in the market - [ ] Attracting celebrities - [ ] Enhancing office decor > **Explanation:** Tombstone ads help establish the credibility and transparency of financial institutions involved in capital markets. ### In which market are tombstone ads primarily used? - [ ] Real estate market - [ ] Grocery market - [ ] Labor market - [x] Capital market > **Explanation:** Tombstone ads are primarily used in the capital market to announce completed financial transactions. ### What term describes an investment bank coordinating stock or bond issuance? - [ ] Underwriter - [x] Lead Manager - [ ] Distributor - [ ] Market Maker > **Explanation:** A lead manager is the primary investment bank responsible for coordinating the issuance of stocks, bonds, or other financial assets. ### Which financial document may also detail information found in a tombstone ad? - [ ] Tax return - [ ] Loan application - [x] Prospectus - [ ] Audit report > **Explanation:** A prospectus is a legal document detailing information about an investment offering, which may include similar data found in tombstone ads.

Thank you for exploring the detailed aspects of tombstone ads and participating in our challenging quiz. Continue expanding your financial acumen and staying informed!