Blackstone’s Financial Tightrope: Navigating Tax Receivable Agreements and Potential IRS Challenges

Blackstone Group L.P. (BX) has disclosed a new risk, in the Share Price & Shareholder Rights category.

Blackstone Group L.P. faces a significant financial risk due to its obligation to pay senior managing directors for tax benefits derived from increased tax basis following its IPO reorganization. This obligation, governed by tax receivable agreements, could lead to substantial payments that may exceed actual tax savings, especially if the IRS challenges the tax basis increase. The company may need to incur debt to meet these obligations if cash resources are insufficient, potentially affecting cash distributions to public stockholders. The timing and amount of these payments depend on various factors, including stock exchanges and future income, posing a complex financial challenge for Blackstone.

Overall, Wall Street has a Moderate Buy consensus rating on BX stock based on 8 Buys and 8 Holds.

To learn more about Blackstone Group L.P.’s risk factors, click here.