The lead manager will sponsor a teach-in to educate its sales force about an upcoming IPO, during which time the issuer's management will make a presentation and answer questions. This event normally occurs at the launch of the roadshow.

IPOs had originally been restricted from soliciting demand, or "testing the waters," for the deal before it officially launched. However, the 2012 JOBS Act allowed emerging growth companies to get feedback from qualified institutional buyers (QIBs), and in 2019 the SEC expanded that rule to include all issuers. Under Regulation A+, an issuer can test the waters with any potential investor, even soliciting interest online or advertising the offering on TV. Being able to test the waters lets companies have a better sense of what valuation they can fetch in public markets, or if they can get an IPO done at all. On the other hand, it also gives institutions one more leg-up over ordinary investors.

An IPO Tombstone is a formal advertisement that announces the details of a public offering or significant financial transaction. Typically published in financial newspapers or magazines, tombstones provide essential information about the offering to potential investors.

Key Features of a Tombstone:

• Basic Information: Tombstones include fundamental details such as the name of the issuing company, the type of security being offered (e.g., common stock, bonds), the total amount being raised, and the names of the underwriting firms managing the issuance.
• Design and Format: Traditionally, tombstones are simple, text-based advertisements characterized by a lack of embellishments, often presented in black and white. The term "tombstone" derives from their stark, tombstone-like appearance.

Purpose of a Tombstone:

• Regulatory Compliance: Tombstones serve as a means for underwriters to publicly disclose the offering, fulfilling legal requirements set forth by securities regulations.
• Investor Information: They provide potential investors with a concise overview of the offering, directing them to more detailed documents like the prospectus for comprehensive information.

Understanding the Underwriting Syndicate:

Tombstones list the underwriting firms involved in the offering, typically arranged in tiers based on their roles and the extent of their participation. The lead underwriter or bookrunner appears at the top, followed by co-managers and other participating firms. This hierarchy reflects the distribution of responsibilities and the allocation of shares among the underwriters.

Accessing IPO Information Through Tombstones:

While tombstones provide a snapshot of the offering, they are not comprehensive. Investors interested in participating in an IPO should consult the prospectus, which offers detailed information about the company's financials, risks, and the terms of the offering. The prospectus can typically be obtained through the SEC's EDGAR database, the issuing company's website, or by contacting the underwriters directly.

More about IPO Tombstones:

Tombstones play a vital role in the financial markets by formally announcing public offerings and guiding potential investors toward more detailed information. Their straightforward design and content ensure clarity and compliance with regulatory standards, facilitating informed investment decisions.

When a parent company wants to recognize the underlying value of one of its businesses, it can either spin off a portion of the shares of the company to the public, thus establishing a value for the business, or it can issue tracking stock. Unlike the shares of a spin-off, which have claim to the assets and profits of the spun-off company, a tracking share has no such claim. As the term states, the shares are meant to "track" the performance of that particular business. A parent company may choose to issue tracking stock because it wants to retain full voting control over the business or because the assets of the division cannot be easily separated from the parent. Tracking stock is also called letter stock.

A French word used to describe segments of the IPO being sold in different countries. A multi-tranche distribution is commonly used for large U.S. and foreign IPOs where there is demand both in the U.S. and in their home country.