Blackstone (BX) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Difficult market, economic and geopolitical conditions can adversely affect our business in many ways, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition
2. 02A period of economic slowdown, which may occur across one or more industries, sectors or geographies, creates operating performance challenges for certain of our funds’ investments, which could adversely affect our operating results and cash flows
3. 03A sustained high interest rate environment could increase the likelihood of an economic slowdown
4. 04A decline in the pace or size of investments made by our funds may adversely affect our revenues
5. 05for certain transactions undertaken by our investment funds is expected to become more administratively burdensome and time consuming. Any potential time delay associated with obtaining approval may make it more difficult for our funds to deploy capital and exit and realize value from investments
6. 06Our revenue, earnings, net income and cash flow can all vary materially due to our reliance on Performance Revenues, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of our common stock to decline
7. 07mark. The incentive income we earn is therefore dependent on the net asset value or the net profit of the vehicle, which could lead to significant volatility in our results
8. 08vehicles. There can be no assurance that such alternatives will be as profitable for us as the traditional investment fund structure, or as to the impact such a trend could have on the cost of our operations or profitability if we were to implement these alternative investment structures
9. 09The asset management business is intensely competitive
10. 10other industry participants will from time to time seek to recruit our investment professionals and other employees away from us
11. 11intermediaries on whom we rely to distribute our investment products also sell their own competing proprietary investment products, which could limit the distribution of our products
12. 12We have increasingly undertaken business initiatives to increase the number and type of investment products we offer to individual investors, which could expose us to new and greater levels of risk
13. 13feeder providers, and in other cases directly to the clients of private banks, independent investment advisors and brokers
14. 14feeder funds or nominee/omnibus investors) and market practices that vary by local jurisdiction. As a result, this expansion subjects us to additional complexity, litigation and regulatory risk
15. 15agreements except in limited circumstances has been introduced in New York
16. 16Changes in U.S. and foreign taxation of businesses and other tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect us, including by adversely impacting our effective tax rate and tax liability
17. 17Cybersecurity and data protection risks could result in the loss of data, interruptions in our business, and damage to our reputation, and subject us to regulatory actions, increased costs and financial losses, each of which could have a material adverse effect on our business and results of operations
18. 18Rapidly developing and changing global data security and privacy laws and regulations could increase compliance costs and subject us to enforcement risks and reputational damage
19. 19liability, increased costs, disruptions to business and operations, and reputational damage. Furthermore, any such inability or perceived inability of our funds’ portfolio companies, even if unfounded, could result in reputational damage to us
20. 20that will take effect in 2025. These amendments impose operationally challenging notification requirements and deadlines and obligations to implement written policies and procedures to govern oversight of service providers that will likely increase associated compliance costs
21. 21Technological developments in artificial intelligence could disrupt the markets in which we operate and subject us to increased competition, legal and regulatory risks and compliance costs
22. 22initiatives, including our development and use of AI Technologies, which subjects us to the risk of being accused of making inaccurate or misleading statements regarding our ability to avail ourselves of the potential benefits of AI Technology
23. 23or investment adviser from registration or memberships or the commencement of a civil or criminal lawsuit against us or our personnel
24. 24initiatives, commitments and goals in our SEC filings or in other disclosures, which subjects us to additional risks, including the risk of being accused of greenwashing
25. 25events and conditions to increase as well
26. 26Financial regulatory changes in the United States could adversely affect our business
27. 27Act, whistleblowers who voluntarily provide original information to the SEC can receive compensation and protection, including payment equal to between 10% and 30% of certain monetary sanctions imposed in a successful government action resulting from the information provided by the whistleblower
28. 28The potential for governmental policy and/or legislative changes and regulatory reform may create regulatory uncertainty for our investment strategies, may make it more difficult to operate our business, and may adversely affect the profitability of our funds’ portfolio companies
29. 29Trade negotiations and related government actions may create regulatory uncertainty for our funds’ portfolio companies and our investment strategies and adversely affect the profitability of our funds’ portfolio companies
30. 30Our provision of products and services to insurance companies subjects us to a variety of risks and uncertainties
31. 31products for insurance companies
32. 32orders, fines, civil penalties, criminal penalties or other disciplinary action. To the extent we are involved in such regulatory actions, our reputation could be harmed, we may become liable for indemnification obligations and we could potentially be subject to enforcement actions, fines and penalties
33. 33regulators (including in Europe, Asia-Pacific, Bermuda and the Cayman Islands, among others) and the International Association of Insurance Supervisors, an international insurance standard-setting organization comprised of over 200 jurisdictions, have similarly focused on each of these topics
34. 34Capital for Insurers Model Act promulgated by the NAIC, as adopted by applicable clients’ insurance regulators. Our Bermuda insurance company clients are subject to Bermuda Solvency Capital Requirements standards and other minimum capital and surplus requirements imposed by the Bermuda Monetary Authority
35. 35We rely on complex exemptions from statutes in conducting our asset management activities
36. 36Complex regulatory regimes and potential regulatory changes in jurisdictions outside the United States could adversely affect our business
37. 37Laws and regulations on foreign direct investment applicable to us and our funds’ portfolio companies, both within and outside the U.S., may make it more difficult for us to deploy capital in certain jurisdictions or to sell assets to certain buyers
38. 38equivalents thereof may seek to impose limitations on one or more such investments that may prevent us from maintaining or pursuing investment opportunities that we otherwise would have maintained or pursued, which could make it more difficult for us to deploy capital in certain of our funds
39. 39limited partners to participate in certain of our investment strategies
40. 40We are subject to substantial risk of litigation and regulatory proceedings and may face significant liabilities and damage to our reputation as a result of allegations of improper conduct and negative publicity
41. 41Poor performance of our investment funds would cause a decline in our revenue, income and cash flow, may obligate us to repay Performance Allocations previously paid to us, and could adversely affect our ability to raise capital for future investment funds
42. 42Our equity investments and some of our debt investments rank junior to investments made by others, exposing us to a greater risk of losing our fund’s investment
43. 43The historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in common stock
44. 44the rates of return reflect our historical cost structure, which may vary in the future due to various factors enumerated elsewhere in this report and other factors beyond our control, including changes in laws
45. 45Certain policies and procedures implemented to mitigate potential conflicts of interest and address certain regulatory requirements may reduce the synergies across our various businesses
46. 46Our failure to deal appropriately with conflicts of interest in our investment business could damage our reputation and adversely affect our businesses
47. 47with such requirements or policies could harm our reputation with fund investors
48. 48opportunities or fees and expenses
49. 49Our use of borrowings to finance our business exposes us to risks
50. 50Dependence on significant leverage in investments by our funds could adversely affect our ability to achieve attractive rates of return on those investments
51. 51investments and potentially decrease our net income.”
52. 52As a result, the risk of loss associated with a leveraged entity is generally greater than for companies with comparatively less debt
53. 53and the timing and magnitude of such losses may be accelerated or exacerbated
54. 54The due diligence process that we undertake in connection with investments by our funds may not reveal all facts and issues that may be relevant in connection with an investment
55. 55We may be unable to consummate or successfully integrate development opportunities, acquisitions or joint ventures that we pursue
56. 56We and our affiliates from time to time are required to report specified dealings or transactions involving Iran or other sanctioned individuals or entities
57. 57Our asset management activities involve investments in relatively illiquid assets, and we may fail to realize any profits from these activities for a considerable period of time
58. 58We make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States
59. 59taxes or withholding on income and gains recognized with respect to such securities
60. 60We may not have sufficient cash to pay back “clawback” obligations if and when they are triggered under the governing agreements with our investors
61. 61Investors in a number of our vehicles may withdraw their investments, and investors in certain of our vehicles may have a right to terminate our management of, or cause the dissolution of, such vehicles, which would lead to a decrease in our revenues
62. 62Third-party investors in our investment funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested by us, which could adversely affect a fund’s operations and performance
63. 63Risk management activities may adversely affect the return on our funds’ investments
64. 64Investments in energy, manufacturing, infrastructure, real estate and certain other assets may expose us to increased environmental liabilities that are inherent in the ownership of real assets
65. 65energy investments made by our energy funds
66. 66Ownership of infrastructure assets may present risk of liability for personal and property injury or impose significant operating challenges and costs with respect to, for example, compliance with zoning, environmental or other applicable laws
67. 67payments) are often contingent upon the achievement of certain milestones, including approvals of the applicable product candidate and/or product sales thresholds, over which BXLS may not have the ability to exercise meaningful control
68. 68payers continue to pursue aggressive initiatives to contain costs and
69. 69Our funds may be forced to dispose of investments at a disadvantageous time
70. 70hedge funds that halted redemptions in the face of illiquidity and other issues, which precluded those funds of hedge funds from receiving their capital back on request
71. 71Underwriting activities by our capital markets services business expose us to risks

Risks Related to Our Organizational Structure

1. 72Any amendment of our certificate of incorporation to elect to become a close corporation under Delaware law
2. 73Any amendments of our certificate of incorporation that are not included in the specified set of amendments that the Series II Preferred Stockholder has the sole right to vote on
3. 74We are a controlled company and as a result qualify for some exceptions from certain corporate governance and other requirements of the New York Stock Exchange
4. 75Potential conflicts of interest may arise among the Series II Preferred Stockholder and the holders of our common stock
5. 76judgment determining that the Series II Preferred Stockholder acted in bad faith or engaged in fraud or willful misconduct and we have also agreed to indemnify the Series II Preferred Stockholder to a similar extent
6. 77The Series II Preferred Stockholder may transfer its interest in the sole share of Series II preferred stock which could materially alter our operations
7. 78We intend to pay regular dividends to holders of our common stock, but our ability to do so may be limited by cash flow from operations and available liquidity, our holding company structure, applicable provisions of Delaware law and contractual restrictions
8. 79If Blackstone Inc. were deemed an “investment company” under the 1940 Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business
9. 80Other anti-takeover provisions in our charter documents could delay or prevent a change in control

Risks Related to Our Common Stock

1. 81The price of our common stock may decline due to the large number of shares of common stock eligible for future sale and for exchange
2. 82under the Securities Act to register common stock, among other securities, for future offerings. Accordingly, common stock registered under such registration statement will be available for sale in the open market