Skip to main content

Blackstone Drops Plan For 'Enron Accounting'

  • Author:
  • Updated:

The Blackstone group dropped a 673 page revised prospectus for its initial public offering on Monday. The revision more than doubled the size of the prospectus, prompting DealBook to describe it as "Ulysses-esque." It's so long that as far as we can tell, no-one is even pretending to have read the entire thing yet.
One piece of news that emerged from the revised prospectus is that Blackstone is ditching its plan to adopt "fair value" accounting standards that would allow it to record the present value of some of its fees even years before it collected them. The new standard has been called "Enron accounting" by some who worry that it would permit too much room for manipulation of the company's financials. But the plan was applauded by others who thought it provided a better picture of the financial prospects of the company than cash accounting. In the end it seems that Blackstone's investment bankers killed the plan because it was feared that it might be too aggressive for a public offering already beset by complexity.
Moving back to a more conservative standard knocks over half-a-billion off last year's pro-forma earnings. controversial plans to book profits at the time of a leveraged buyout, knocking $595m off last year’s pro-forma earnings even as the private equity group finalises a $34bn float.
Blackstone drops accounting plan [Financial Times]