Tombstones play an important role in investments by memorializing and recording key deal information. In investments, a tombstone is an advertisement placed after the completion of a financial transaction indicating the parties involved. Tombstones serve several key functions, including recognizing parties involved, demonstrating credibility, and advertising services. When analyzing investment deals, tombstones provide useful context and history.
Basic definition and key functions of investment tombstones
A tombstone in the investment world is a written record and advertisement memorializing the key details of a transaction, usually placed after the completion of an investment deal. Tombstones recognize the parties involved in the deal and demonstrate credibility for lead managers. They also advertise the services of managers to potential future clients. Overall, tombstones serve to memorialize deals, recognize contributions of managers, establish credibility, and advertise services to attract more business.
Key details contained in investment tombstones
Investment tombstones contain several key details about a concluded deal. This includes the issuer or company involved, the type of security issued (e.g. stocks or bonds), the amount raised in the offering, the managers who led the offering, and the date. Listing these details memorializes the accomplishment for the issuer and lead managers in closing the deal, thereby recognizing their work and building credibility for future deals.
Why investment tombstones matter
Tombstones serve important functions for investment firms and managers. By memorializing deals, tombstones recognize the contributions of lead managers. This establishes credibility and reputation to compete for more lucrative deals in the future. Tombstones also advertise a firm’s services to potential new clients. Issuers want to select managers with proven track records closing profitable deals, and tombstones demonstrate this success.
How to interpret tombstones when analyzing investments
When researching investment opportunities, tombstones provide useful context and history about past deals. The managers listed on tombstones give insight into an issuer’s business relationships. Noting the types of securities issued, amounts raised, and timing of past deals enables comparison to potential new investments. If all else being equal, issuers demonstrating consistent access to capital through past tombstones suggest lower risk and greater investor confidence.
In the investment world, tombstones serve to memorialize and record key details of completed financial transactions, recognize parties involved, demonstrate credibility for lead managers, and advertise services to attract more business. Analyzing tombstones provides useful context when evaluating new investment opportunities.