Blue OWL Capital (OWL) risk factors, FY2024 10-K

Risks Related to Macroeconomic Factors

1. 01Difficult market and geopolitical conditions may reduce the value or hamper the performance of the investments made by our products or impair the ability of our products to raise or deploy capital
2. 02Fluctuations in interest rates and future increases in inflation may adversely affect the business, results of operations and financial condition of our products and their portfolio companies
3. 03Fluctuations in interest rates could have a material adverse effect on our business and that of our products’ portfolio companies
4. 04Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail

Risks Related to Investment Management

1. 05Management fees and other fees comprise a substantial majority of our revenues and a reduction in such fees could have an adverse effect on our results of operations and the level of cash available for distributions to our stockholders
2. 06Our growth depends in large part on our ability to raise new and successor products. If we were unable to raise such products, the growth of our FPAUM and management fees, and ability to deploy capital into investments, would slow or decrease
3. 07The investment management business is intensely competitive
4. 08Certain of our strategic relationship investors (including early-stage investors in new products) may be granted the right to participate in the net profits or gross revenues or receive rebates
5. 09Our failure to comply with investment guidelines set by our clients and/or investors could negatively impact our client and investor relationships, which could adversely affect our business, financial condition and results of operations

Risks Related to Our Products

1. 10The historical returns attributable to our products should not be considered as indicative of the future results of our products or of our future results or of any returns expected on an investment in our Class A Shares
2. 11Valuation methodologies for certain assets of our products can be open to subjectivity
3. 12The use of leverage by our products may materially increase the returns of such products but may also result in significant losses or a total loss of capital
4. 13We are vulnerable to an increased number of investors seeking to participate in share redemption programs or tender offers of our non-traded products
5. 14The products and investment strategies we currently pursue may expose us to specific market, tax, regulatory and other risks
6. 15Our GP Strategic Capital products may suffer losses if our Partner Managers are unable to raise new products or grow their AUM
7. 16Our alternative credit products may expose us to incremental risks and complexities
8. 17Our Real Assets products are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate
9. 18Our professional sports minority stakes strategy is small, but may have a disproportionate effect on our reputation
10. 19Our equity investments and some of our debt investments rank junior to investments made by others, exposing us to greater risk of losing our investment

Risks Related to Our Operations

1. 20The anticipated benefits of recent or future acquisitions may not be realized or may take longer than expected to realize
2. 21We may continue to enter into new product lines and expand into new investment strategies, geographic markets and businesses, each of which may result in upfront costs and additional risks and uncertainties in our business
3. 22Rapid growth of our business may be difficult to sustain and may place significant demands on our administrative, operational and financial resources
4. 23Our use of leverage to finance our business or that of our products may expose us to substantial risks. Any security interests or negative covenants required by a credit facility we enter into may limit our ability to create liens on assets to secure additional debt
5. 24Risk management activities may adversely affect the return on our and our products’ investments
6. 25Cybersecurity risks and cyber data security incidents could adversely affect our business by causing a disruption to our operations, a compromise or corruption of our confidential information and confidential information in our possession and damage to our business relationships
7. 26We are subject to risks in using custodians, counterparties, administrators and other agents

Risks Related to Personnel

1. 27We depend on our senior management team, senior investment professionals and other key personnel to provide their services to us and our products
2. 28Employee misconduct could harm us by impairing our ability to attract and retain product investors and subjecting us to significant legal liability, regulatory scrutiny and reputational harm
3. 29Our future growth depends on our ability to attract, retain and develop human capital in a highly competitive talent market
4. 30Conflicts of interest may arise in our allocation of capital and co-investment opportunities
5. 31Potential conflicts of interest in allocation among our products
6. 32Potential conflicts of interest in connection with co-investments between our private funds and our BDCs
7. 33Conflicts related to investments by several of our products at different levels of the capital structure of a single portfolio company or Partner Manager
8. 34Conflicts of interest may arise in our allocation of costs and expenses, and we are subject to increased regulatory scrutiny and uncertainty with regard to those allocations
9. 35Potential conflicts of interest in allocation among Blue Owl, our products and our investment professionals
10. 36Existing and future relationships between or among our Partner Managers, our products and their investors could give rise to actual or perceived conflicts of interest
11. 37required to take actions that may be adverse to those of our Real Assets products in enforcing its rights under the relevant facilities or agreements, or vice versa
12. 38Conflicts related to our lack of information barriers
13. 39Additional and unpredictable conflicts of interests may rise in the future
14. 40Our GP Strategic Capital products hold and make investments in Partner Managers and there may be provisions within our arrangements with Partner Managers that could affect our right to receive or share information or cause us to sell our interests in the Partner Manager
15. 41The operations of our business and related transactions may affect our reputation and relationship with our Partner Managers
16. 42Our entitlement and that of certain Principals and employees to receive performance income from certain of our products may create an incentive for us to make more decisions, including speculative investments and determinations on behalf of our products, than would be the case in the absence of such performance income

Risks Related to Our Legal and Regulatory Environment

1. 43Our business is subject to extensive domestic and foreign regulations that may subject us to significant costs and compliance requirements, and there can be no assurance that we will satisfactorily comply with such regulations
2. 44We have expanded our business globally. Differences between the laws and rules governing our business in foreign jurisdictions compared to the United States result in inconsistent regulatory requirements that it may not be possible to fully reconcile in a cost-efficient manner across our business
3. 45Investment Advisers Act of 1940
4. 46On January 31, 2020, the UK formally withdrew from the European Union (“Brexit”)
5. 47The AIFMD regulates the activities of certain private fund managers undertaking fund management activities or marketing fund interests to investors in the European Economic Area (“EEA”) and the UK, respectively
6. 48The European Union is implementing a Directive to amend AIFMD (“AIFMD II”)
7. 49Heightened scrutiny of the financial services industry by regulators may materially and adversely affect our business
8. 50Regulators are also increasing scrutiny and considering regulation of the use of technologies. We cannot predict what, if any, actions may be taken, but such regulation could have a material adverse effect on our business and results of operations
9. 51Our provision of asset management services to the insurance industry subjects us to a variety of risks and uncertainties
10. 52of insurance and reinsurance companies and their affiliates pursuant to several investment management agreements and has developed, and may continue to develop, other capital-efficient products for insurance and reinsurance companies
11. 53Regulations governing the operations of certain of our products affect their ability to raise, and the way in which the applicable products raise, additional capital
12. 54We, our products and our products’ portfolio companies are subject to increasing scrutiny from certain investors, third party assessors, our stockholders and other stakeholders with respect to ESG-related topics
13. 55We are subject to increasing scrutiny from regulators with respect to ESG-related issues and the regulatory disclosure landscape surrounding related topics continues to evolve
14. 56Climate change and climate-related effects may expose us to systemic, global and macroeconomic risks and could adversely affect our business and the businesses of our products’ portfolio companies
15. 57Increased data protection regulation may result in increased complexities and risk in connection with the operation of our business and our products
16. 58We are subject to litigation risks, and consequently, we may face liabilities and damage to our professional reputation
17. 59We may not be able to maintain sufficient insurance to cover us for potential litigation or other risks
18. 60Our products, and in particular our BDCs, historically used LIBOR, the London Interbank Offered Rate, as a reference rate in term loans they extended to portfolio companies. The terms of our BDCs’ debt investments generally included minimum interest rate floors which were calculated based on LIBOR
19. 61Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business
20. 62Failure to comply with anti-corruption laws or with regulations regarding the prevention of money laundering or terrorism or national security could adversely affect our business
21. 63Economic sanction laws in the U.S. and other jurisdictions may prohibit us and our affiliates from transacting with certain countries, individuals and companies
22. 64Certain of our products and accounts that we manage or advise are subject to ERISA and/or Section 4975 of the Code. Failure to comply with the requirements of ERISA and/or Section 4975 could subject us to consequences including the imposition of excise taxes, disgorgement of profits, and personal liability
23. 65Changes in tax policies and regulations may create uncertainty for our business and investment strategies

Risks Related to Our Structure and Governance

1. 66Blue Owl has elected to be treated as a “controlled company” within the meaning of the NYSE listing standards and, as a result, our stockholders may not have certain corporate governance protections that are available to stockholders of companies that are not controlled companies
2. 67The multi-class structure of Blue Owl common stock has the effect of concentrating voting power with the Principals, which limits an investor’s ability to influence the outcome of important transactions, including a change in control
3. 68Potential conflicts of interest may arise among the holders of Class B and Class D Shares and the holders of our Class A and Class C Shares
4. 69Delaware law, our certificate of incorporation and our bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
5. 70In addition, as a Delaware corporation, Blue Owl Capital Inc. is generally subject to provisions of Delaware law, including the DGCL, although we have elected not to be governed by Section 203 of the DGCL
6. 71In addition, the provisions of the Investor Rights Agreement provide the stockholders party thereto with certain Board representation and other consent rights that could also have the effect of delaying or preventing a change in control
7. 72If either of the Blue Owl Operating Partnerships were treated as a corporation for U.S. federal income tax or state tax purposes, then the amount available for distribution by such Blue Owl Operating Partnerships could be substantially reduced and the value of Blue Owl Capital Inc.’s shares could be adversely affected
8. 73Pursuant to the Tax Receivable Agreement, Blue Owl GP will be required to make payments to certain equity holders for certain tax benefits Blue Owl Capital Inc. and Blue Owl GP may claim and those payments may be substantial
9. 74In certain cases, payments under the Tax Receivable Agreement may exceed the actual tax benefits Blue Owl Capital Inc. or Blue Owl GP realizes or be accelerated

Risks Related to Our Class A Shares

1. 75The market price and trading volume of our Class A Shares may be volatile, which could result in rapid and substantial losses for holders of our Class A Shares
2. 76Sales of Class A Shares resulting from exchanges of Common Units pledged by our directors and officers could cause the price of our Class A Shares to decrease
3. 77A decline in our share price could subject us to securities class action litigation
4. 78Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our Class A Shares
5. 79Future offerings of debt or offerings or issuances of equity securities by us may adversely affect the market price of our Class A Shares or otherwise dilute all other stockholders