Blackstone takes profits hit after accounting change

As it prepares for a $34bn (£17bn) float, US private equity firm
Blackstone has dropped controversial
plans to book profits at the time of a leveraged buyout.

This move wiped out $595m from the company’s 2006 pro-forma earnings.

Originally, the group had planned to adopt a new fair value accounting
standard, which would have allowed it to treat some of its fees as though they
were options it acquired for nothing at the time of a buyout – allowing it to
record their value immediately.

But in a recent SEC filing the group said
it no longer planned early adoption of the accounting standard.

Further reading:

Private equity bosses face Treasury grilling

Private equity seeks new model to cut advisers’ fees

Enron-style accounting under scrutiny in US

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