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Case | HBS Case Collection | January 2016 (Revised August 2018)

Blackstone at Age 30

by Josh Lerner, John D. Dionne and Amram Migdal

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Abstract

Since its IPO in 2007 and following the global financial crisis, Blackstone largely outpaced its alternative investment firm peers in assets under management, new business launches, profitability, and market capitalization. Under the leadership of Stephen A. Schwarzman, chairman and CEO, and president and COO Hamilton ("Tony") James, Blackstone's growth derived from substantial horizontal expansion into new alternative asset products and services, both organically and through acquisition. These included businesses in private equity, real estate, funds of hedge funds, alternative credit, opportunistic transactions ("Tactical Opportunities"), and secondaries investments. The firm has also innovated in sourcing capital from a variety of limited partners. Blackstone's culture of centralized investment processes and risk management coupled with entrepreneurial leadership contributed to its growth in important ways, but the firm faces important external and internal challenges as it seeks to continue its growth.

Keywords: Business Growth and Maturation; Private Equity; Financial Services Industry; New York (city, NY);

Language: English Format: Print 29 pages EducatorsPurchase

Citation:

Lerner, Josh, John D. Dionne, and Amram Migdal. "Blackstone at Age 30." Harvard Business School Case 816-013, January 2016. (Revised August 2018.)

Related Work

  1. Teaching Note | HBS Case Collection | September 2018

    Blackstone at Age 30

    Josh Lerner

    This teaching note is meant to guide in the instruction of HBS No. 316-013 "Blackstone at 30" case. It examines the process of institutionalization and scaling in private equity and alternative investments more generally, looking specifically at how Blackstone's size affects its business model and opportunities for growth. It also explores the process by which Blackstone became a publicly owned company as well as the advantages and disadvantages that public ownership offers to a firm like Blackstone.

    Keywords: finance; private equity; Blackstone; alternative assets; venture capital; Private Equity; Business Growth and Maturation; Public Ownership; Cost vs Benefits; Financial Services Industry;

    Citation:

    Lerner, Josh. "Blackstone at Age 30." Harvard Business School Teaching Note 819-053, September 2018.  View Details
    CiteView DetailsPurchase Related
  2. Case | HBS Case Collection | January 2016 (Revised August 2018)

    Blackstone at Age 30

    Josh Lerner, John D. Dionne and Amram Migdal

    Since its IPO in 2007 and following the global financial crisis, Blackstone largely outpaced its alternative investment firm peers in assets under management, new business launches, profitability, and market capitalization. Under the leadership of Stephen A. Schwarzman, chairman and CEO, and president and COO Hamilton ("Tony") James, Blackstone's growth derived from substantial horizontal expansion into new alternative asset products and services, both organically and through acquisition. These included businesses in private equity, real estate, funds of hedge funds, alternative credit, opportunistic transactions ("Tactical Opportunities"), and secondaries investments. The firm has also innovated in sourcing capital from a variety of limited partners. Blackstone's culture of centralized investment processes and risk management coupled with entrepreneurial leadership contributed to its growth in important ways, but the firm faces important external and internal challenges as it seeks to continue its growth.

    Keywords: Business Growth and Maturation; Private Equity; Financial Services Industry; New York (city, NY);

    Citation:

    Lerner, Josh, John D. Dionne, and Amram Migdal. "Blackstone at Age 30." Harvard Business School Case 816-013, January 2016. (Revised August 2018.)  View Details
    CiteView DetailsEducatorsPurchase Related

About the Authors

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Josh Lerner
Jacob H. Schiff Professor of Investment Banking
Unit Head, Entrepreneurial Management
Entrepreneurial Management
Finance

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John D. Dionne
Senior Lecturer of Business Administration
Finance

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More from these Authors

  • Working Paper | HBS Working Paper Series | 2019

    The Economic Effects of Private Equity Buyouts

    Steven J. Davis, John Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner and Javier Miranda

    We examine thousands of U.S. private equity (PE) buyouts from 1980 to 2013, a period that saw huge swings in credit market tightness and GDP growth. Our results show striking, systematic differences in the real-side effects of PE buyouts, depending on buyout type and external conditions. Employment at target firms shrinks 13% over two years in buyouts of publicly listed firms but expands 13% in buyouts of privately held firms, both relative to contemporaneous outcomes at control firms. Labor productivity rises 8% at targets over two years post buyout (again, relative to controls), with large gains for both public-to-private and private-to-private buyouts. Target productivity gains are larger yet for deals executed amidst tight credit conditions. A post-buyout widening of credit spreads or slowdown in GDP growth lowers employment growth at targets and sharply curtails productivity gains in public-to-private and divisional buyouts. Average earnings per worker fall by 1.7% at target firms after buyouts, largely erasing a pre-buyout wage premium relative to controls. Wage effects are also heterogeneous. In these and other respects, the economic effects of private equity vary greatly by buyout type and with external conditions.

    Keywords: private equity buyouts; Impact; Private Equity; Economics; Employment; Performance Productivity; Wages;

    Citation:

    Davis, Steven J., John Haltiwanger, Kyle Handley, Ben Lipsius, Josh Lerner, and Javier Miranda. "The Economic Effects of Private Equity Buyouts." Harvard Business School Working Paper, No. 20-046, October 2019.  View Details
    CiteView DetailsSSRN Read Now Related
  • Case | HBS Case Collection | October 2019

    Hony Capital and Jushi Group

    Josh Lerner, Shai Bernstein and Ann Leamon

    Hony Capital, a multi-billion dollar private equity firm based in China, is investing in a subsidiary of Jushi Group, a Chinese company that is one of the world’s largest fiberglass producers. The specific project will build a plant in the United States. In this case, students consider the value Hony can provide to Jushi, and must also determine how Hony will eventually exit the transaction, given the complexity around its structure.

    Keywords: real estate; Investing; fundraising; manufacturing; Private Equity; Asset Management; Finance; Investment; Venture Capital; China; United States;

    Citation:

    Lerner, Josh, Shai Bernstein, and Ann Leamon. "Hony Capital and Jushi Group." Harvard Business School Case 820-040, October 2019.  View Details
    CiteView DetailsEducators Related
  • Case | HBS Case Collection | March 2007 (Revised September 2019)

    Motilal Oswal Financial Services Ltd.: An IPO in India

    Felda Hardymon, Joshua Lerner and Ann Leamon

    The executives of Motilal Oswal Financial Services, Ltd., one of the largest brokerages in India, are considering an IPO on the Indian markets. The company recently received a small private equity investment from two global private equity firms, which it has not yet fully invested. Historically, the Indian markets have favored higher-revenue companies. Should Motilal Oswal go public now, to take advantage of the hot Indian market, or hold off and build its revenue for a higher valuation?

    Keywords: Private Equity; Initial Public Offering; Investment; Emerging Markets; Financial Services Industry; India;

    Citation:

    Hardymon, Felda, Joshua Lerner, and Ann Leamon. "Motilal Oswal Financial Services Ltd.: An IPO in India." Harvard Business School Case 807-095, March 2007. (Revised September 2019.)  View Details
    CiteView DetailsEducatorsPurchase Related
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