Blackstone takes profits hit after accounting change
US private equity firm drops plans to book profits at the time of a leveraged buyout
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