Goldman Sachs BDC (GSBD) risk factors, 2025 10-K

Other

1. 01Political, social and economic uncertainties may create and exacerbate risks
2. 02We will be subject to corporate-level U.S. federal income tax on all of our income if we are unable to maintain our qualification for tax treatment as a RIC
3. 03Our activities may be limited as a result of potentially being deemed to be controlled by GS Group Inc., a bank holding company
4. 04We operate in a highly competitive market for investment opportunities
5. 05We borrow money, which may magnify the potential for gain or loss and may increase the risk of investing in us
6. 06We are exposed to risks associated with changes in interest rates
7. 07The lack of liquidity in our investments may adversely affect our business
8. 08Shares of closed-end investment companies, including BDCs, frequently trade at a discount to their NAV per share
9. 09Purchases of our common stock by us under any 10b5-1 plan or otherwise may result in dilution to our NAV per share

Risks Relating to Market Developments and General Business Environment

1. 10The capital markets may experience periods of disruption and instability. Such market conditions may have materially and adversely affected debt and equity capital markets, which may have a negative impact on our business and operations

Risks Relating to Legal and Regulatory Matters

1. 11Our operation as a BDC imposes numerous constraints on us and significantly reduces our operating flexibility. In addition, if we fail to maintain our status as a BDC, we might be regulated as a registered closed-end investment company, which would subject us to additional regulatory restrictions
2. 12Regulations governing our operations as a BDC affect our ability to, and the way in which we, raise additional capital. These constraints may hinder our Investment Adviser’s ability to take advantage of attractive investment opportunities and to achieve our investment objective
3. 13We incur significant costs as a result of being subject to the reporting requirements under the Exchange Act
4. 14Efforts to comply with Section 404 of the Sarbanes-Oxley Act involve significant expenditures, and noncompliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our securities
5. 15We cannot predict how new tax legislation will affect us, our investments, or our stockholders, and any such legislation could adversely affect our business
6. 16Our ability to enter into transactions with our affiliates is restricted
7. 17CFTC rules may have a negative impact on us and our Investment Adviser
8. 18Our ability to enter into transactions involving derivatives and financial commitment transactions may be limited
9. 19Certain investors are limited in their ability to make significant investments in us

Risks Relating to Competition

1. 20We depend upon management personnel of our Investment Adviser for our future success

Risks Relating to Our Operations

1. 21We are dependent on information systems, and systems failures or cybersecurity incidents, as well as operating failures, could significantly disrupt our business, which may, in turn, negatively affect our liquidity, financial condition or results of operations
2. 22These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our securities and our ability to pay distributions to our stockholders

Risks Relating to Our Business and Structure

1. 23Our Investment Adviser, its principals, investment professionals and employees and the members of its Private Credit Investment Committee may have certain conflicts of interest
2. 24Subject to applicable law, we may invest alongside Goldman Sachs and other Accounts
3. 25Goldman Sachs’ financial and other interests may incentivize our Investment Adviser to favor other Accounts
4. 26Our financial condition and results of operations depend on our Investment Adviser’s ability to manage our future growth effectively
5. 27Our ability to grow depends on our access to adequate capital
6. 28In addition, we may be unable to obtain our desired leverage, which would, in turn, affect a stockholder’s return on investment
7. 29The Management Fee is payable even in the event the value of a stockholder’s investment declines
8. 30The Incentive Fee based on income takes into account our past performance
9. 31Potential conflicts of interest with other businesses of Goldman Sachs could impact our investment returns
10. 32Goldman Sachs has influence, and may continue to exert influence, over our management and affairs and over most votes requiring stockholder approval
11. 33Our Board of Directors may change our investment objective, operating policies and strategies without prior notice or stockholder approval
12. 34Our Investment Adviser can resign on 60 days’ notice. We may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could adversely affect our financial condition, business and results of operations
13. 35Our Investment Adviser’s responsibilities and its liability to us are limited under the Investment Management Agreement, which may lead our Investment Adviser to act in a riskier manner on our behalf than it would when acting for its own account
14. 36We may experience fluctuations in our quarterly results
15. 37We are subject to risks related to corporate social responsibility
16. 38The effect of global climate change may impact the operations of our portfolio companies

Risks Relating to Our Investments

1. 39Our investments are very risky and highly speculative
2. 40Revolving Credit Facilities. From time to time, we may acquire or originate revolving credit facilities in connection with our investments in other assets, which may result in our holding unemployed funds, negatively impacting our returns
3. 41Investing in middle-market companies involves a number of significant risks
4. 42We have exposure to credit risk and other risks related to credit investments
5. 43Changes in inflation may adversely affect the business, results of operations and financial condition of our portfolio companies
6. 44Many of our portfolio securities do not have a readily available market price, and we value these securities at fair value as determined in good faith in accordance with the Investment Company Act, which valuation is inherently subjective and may not reflect what we may actually realize for the sale of the investment
7. 45Our portfolio may be focused in a limited number of portfolio companies, which will subject us to a risk of significant loss if any of these companies default on their obligations under any of its debt instruments or if there is a downturn in a particular industry
8. 46We may not be in a position to exercise control over our portfolio companies or to prevent decisions by management of our portfolio companies that could decrease the value of our investments
9. 47We may be subject to risks associated with subordinated debt
10. 48We may be subject to risks associated with unsecured debt
11. 49We may be subject to risks arising from revolving credit facilities
12. 50We may be subject to risks arising from purchases of secondary debt
13. 51We may acquire investments directly (by way of assignment) or indirectly (by way of participation). As described in more detail below, holders of participation interests are subject to additional risks not applicable to a holder of a direct interest in a debt obligation
14. 52We may have difficulty sourcing investment opportunities
15. 53Our failure or inability to make follow-on investments in our portfolio companies could impair the value of our portfolio
16. 54We may elect not to, or be unable to, make follow-on investments or may lack sufficient funds to make those investments
17. 55Our portfolio companies may prepay loans, which may reduce stated yields in the future if the capital returned cannot be invested in transactions with equal or greater expected yields
18. 56Investments in common and preferred equity securities, many of which are illiquid with no readily available market, involve a substantial degree of risk
19. 57in some cases, equity securities in which we invest will not pay current dividends, and our ability to realize a return on our investment, as well as to recover our investment, will be dependent on the success of the portfolio company
20. 58generally, preferred security holders have no voting rights with respect to the issuing company, subject to limited exceptions
21. 59By originating loans to companies that are experiencing significant financial or business difficulties, we may be exposed to distressed lending risks
22. 60We may be exposed to special risks associated with bankruptcy cases
23. 61Declines in market prices and liquidity in the corporate debt markets can result in significant net unrealized depreciation of our portfolio, which in turn would affect our results of operations
24. 62Economic recessions or downturns could impair our portfolio companies and harm our operating results
25. 63Our portfolio companies may have incurred or issued, or may in the future incur or issue, debt or equity securities that rank equally with, or senior to, our investments in such companies, which could have an adverse effect on us in any liquidation of the portfolio company
26. 64Our portfolio companies may be highly leveraged
27. 65We may expose ourselves to risks if we engage in hedging transactions
28. 66We may form one or more CLOs, which may subject us to certain structured financing risks

Risks Relating to Our Securities

1. 67Investing in our securities involves an above-average degree of risk
2. 68The market price of our securities may fluctuate significantly
3. 69loss of a major funding source
4. 70Sales of substantial amounts of our common stock in the public market may have a material adverse effect on the market price of our common stock
5. 71Our stockholders will experience dilution in their ownership percentage if they opt out of our DRIP
6. 72Our stockholders that do not opt out of our DRIP should generally expect to have current tax liabilities without receiving cash to pay such liabilities
7. 73We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock
8. 74Certain provisions of our certificate of incorporation and bylaws and the DGCL, as well as other aspects of our structure, including the substantial ownership interest of GS Group Inc., could deter takeover attempts and have an adverse impact on the price of our common stock
9. 75require stockholders to provide advance notice of new business proposals and director nominations under specific procedures
10. 76The tax treatment of a non-U.S. stockholder in its jurisdiction of tax residence will depend entirely on the laws of such jurisdiction, and may vary considerably from jurisdiction to jurisdiction
11. 77We may have difficulty paying our required distributions if we recognize taxable income before or without receiving cash representing such income
12. 78Our stockholders may receive shares of our common stock or preferred stock as distributions, which could result in adverse tax consequences to them
13. 79If we are not treated as a “publicly offered regulated investment company,” as defined in the Code, U.S. stockholders that are individuals, trusts or estates will be taxed as though they received a distribution of some of our expenses
14. 80Purchases of our common stock pursuant to any 10b5-1 plan or otherwise may result in the price of our common stock being higher than the price that otherwise might exist in the open market
15. 81To the extent OID and PIK interest constitute a portion of our income, we will be exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash representing such income
16. 82OID and PIK instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of any associated collateral. OID and PIK income may also create uncertainty about the source of our cash distributions
17. 83Terms relating to redemption may materially adversely affect an investor’s return on any debt securities that we may issue
18. 84Our credit ratings may not reflect all risks of an investment in our debt securities
19. 85Holders of any preferred stock we might issue would have the right to elect members of the board of directors and class voting rights on certain matters
20. 86There is a risk that investors in our equity securities may not receive distributions or that our distributions may not grow over time and that investors in our debt securities may not receive all of the interest income to which they are entitled