What it means
When a company sells shares or bonds to investors, the investment banks that organise the sale often publish a tombstone once the deal is done or launched. It is a record of who took part and what was sold.
It is not a sales document and it does not try to persuade anyone. The typical tombstone shows the name of the issuer, the type of security, the number of securities or the dollar amount, and the price if it has been set.
It then lists the banks involved, arranged in rows by their roles. The lead banks appear at the top, in larger type, followed by other banks further down.
The order matters because it shows status. Banks care a great deal about their position on a tombstone, since it signals their rank in the industry and helps them win future business.
Disputes over where a bank appears, known as "league table" and "bracket" positions, can be intense. Tombstones also serve a regulatory purpose.
In many countries, rules limit what can be said about a securities offering before the formal offering document, called a prospectus, is available. A tombstone is designed to fit within those limits by sticking to basic facts and pointing readers to the prospectus for the full picture.
These days, many tombstones are published online and many are used as marketing for the banks, often framed and displayed in the banks' offices as trophies. Companies and advisers also put them in their promotional material to show their track record.
Because they are public, they can be used to build lists of recent deals. For a finance professional, a tombstone offers a quick summary of a transaction, but it should never be the basis for an investment decision.
The prospectus carries the detail on risks, finances and terms, and it is the legal document that investors rely on. Always go to the prospectus for the real analysis.
In practice
Real-world examples.
Example
A software company completes an initial public offering of 10 million shares at $20 each, raising $200 million. The lead banks publish a tombstone listing the company, the number of shares, the price and the names of the banks. The notice also states that it is not an offer to sell and that investors should read the prospectus before deciding.
Example
An investment bank's marketing team frames the tombstones from its recent bond deals and places them in the office entrance. New clients walk past the display and see the bank's track record at a glance. The marketing head says the display starts more conversations than any brochure, since every deal on the wall is a public record of work the bank has actually done.
Example
A junior analyst building a list of recent bond issues in the energy sector uses published tombstones as a starting point. The analyst then reads the prospectus for each deal to confirm the details before using the data. The tombstones save time in finding which deals took place, but they cannot answer questions about risk or pricing.
Case study
Seen in the real world.
Brightfield Medical is an illustrative, fictional company that raised $150 million by selling new shares to investors. The finance director worked with three banks to organise the sale, and a tombstone was published in the financial press on the day the deal was completed.
The notice listed Brightfield's name, the amount raised, and the banks in order of their roles. One of the smaller banks asked to be moved up a line, which led to a polite but firm negotiation over its role and fees.
The illustrative outcome was that the order stayed the same, reflecting the work each bank had done. The finance director later used the tombstone in the company's investor presentation, as a simple and credible way to show who had backed the offering. She also kept a copy in the board records, because it gave a clean and dated summary of the amount raised and the banks involved.
Watch out
Common mistakes.
- Treating a tombstone as a sales document, when it simply records the facts of a deal.
- Making an investment decision from a tombstone without reading the prospectus.
- Assuming that the order of banks is random, when it reflects rank and role in the deal.
Questions
People also ask.
What does a tombstone show?
It shows the issuer, the type and size of the security, the price if set, and the names of the banks in order of their roles, but it gives no financial details about the company.
Why is it called a tombstone?
The original printed notices were stark, boxed and plain, and they resembled a gravestone in appearance.
Is a tombstone legally an offer to sell securities?
No, a tombstone is not an offer, and it normally states that the full terms are found only in the prospectus.
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