SEC Company Response from Blackstone (BX) — Aug 9, 2013
Blackstone Inc.
Date: Aug. 9, 2013 · CIK: 0001393818 · Accession: 0001193125-13-328939
AI Filing Summary & Sentiment
File numbers found in text: 001-33551
Letter
U.S. Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, D.C. 20549
RE: The Blackstone Group L.P.
Dear Ms. Ciboroski:
On behalf of The Blackstone Group L.P., we are responding to your comment letter, dated July 26, 2013, regarding our Form 10-K for the Year Ended December 31, 2012 (“2012 Form 10-K”).
To assist your review, we have retyped the text of the Staff’s comments in italics below. Please note that references to page numbers in our responses refer to the page numbers of our EDGAR-filed 2012 Form 10-K.
Form 10-K for Fiscal Year Ended December 31, 2012
Item 1A. Risk Factors, page 18
We have engaged in large-sized investments, which involve certain…, page 39
1. We note the recent media articles regarding the size of your investments in rental properties in the United States. In future filings, please expand your risk factor disclosure to discuss and quantify these investments, or tell us why you believe that additional disclosure is unnecessary.
We respectfully advise the Staff that our investments in residential rental properties do not raise the issues addressed by the risk factor in question. While we do not believe that additional disclosure is necessary at this time, we advise the Staff that we will continue to monitor our investments in residential rental properties and, to the extent such investments change the nature of our disclosed risks, including risks related to asset type concentrations, in any material respect, we will enhance our disclosure in future filings.
The Blackstone Group L.P.
345 Park Avenue
New York, NY 10154
212 583-5000
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 2 of 10
Item 8—Financial Statements and Supplementary Data
Consolidated Statement of Cash Flows, page 142
2. We note the supplemental non-cash investing and financing line items titled Conversion of Blackstone Holdings Units to Common Units and Acquisition of Ownership Interests from Non-Controlling Interest Holders. Please respond to the following.
•
Please tell us whether, and if so how, these line items relate to each other.
•
To the extent the line item Acquisition of Ownership Interests from Non-Controlling Interest Holders relates to the tax receivable agreements discussed on page 191, please tell us how, and provide us with an illustrative example of how the deferred tax asset amount is calculated.
•
Please consider expanding your disclosures to discuss in more detail what these line items represent given the significance of the amounts.
The supplemental non-cash disclosure line titled Conversion of Blackstone Holdings Units to Common Units and Acquisition of Ownership Interests from Non-Controlling Interest Holders are related in that they both result from the exchange of Blackstone Holdings Partnership Units to Blackstone Common Units.
The Conversion of Blackstone Holdings Units to Common Units line represents the book value capital amount related to the exchange of Blackstone Holdings Partnership Units to Blackstone Common Units. These exchanges generally occur four times a year.
The Acquisition of Ownership Interests from Non-Controlling Interest Holders line represents the recording of the deferred tax asset, due to affiliates, and partners’ capital amounts related to the exchanges of Blackstone Holdings Partnership Units to Blackstone Common Units. These taxable exchanges result in increases in the tax basis of tangible and intangible assets of Blackstone Holdings as a result of the Internal Revenue Code Section 754 election made by Blackstone Holdings I L.P. and Blackstone Holdings II L.P. and the liability resulting from the tax receivable agreements that one of the corporate subsidiaries of The Blackstone Group L.P. entered into with the holders of Blackstone Holdings Partnership Units.
The tax receivable agreements provide that as the corporate taxpayer realizes a cash savings resulting from the aforementioned increases in tax basis (i.e., through the tax deduction of amortization expense) and of certain other tax benefits related to these agreements, the corporate taxpayer pays 85% of the cash savings to the such holders who had previously exchanged units. The due to affiliates amount represents the expected future payments under the tax receivable agreement.
A simple illustrative example is as follows:
Partner A, a partner in the Blackstone Holdings Partnerships, exchanges 100 units of each of the Blackstone Holdings Partnerships for 100 common units of The Blackstone Group L.P. If we assume the fair value of the Blackstone Holdings I L.P. units included in the exchange is $1,000 and the inside tax basis in the assets
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 3 of 10
of Blackstone Holdings I L.P. allocable to Partner A is $400, then the resulting increase in tax basis is $600 (in accordance with Internal Revenue Code Section 743(b)). Assume the total increase in tax basis equals Section 197 intangibles that are amortized over 15 years. The amortization expense for the Section 743(b) adjustment is allocated to the corporate subsidiary that is the general partner of Blackstone Holdings I L.P. The potential cash savings to the corporate subsidiary of the future amortization is $240 (assuming a 40% marginal tax rate). 85% of this cash savings, or $204, is payable to Partner A. In this example, the deferred tax asset recorded by the corporate subsidiary resulting from the increase to the tax basis is $240, the due to affiliates is $204 and the increase to partners’ capital is $36.
In addition, in this example, the $204 payable to Partner A results in an additional increase in tax basis of $204 and the above calculation is repeated resulting in additions to the deferred tax benefit, due to affiliates and partners’ capital.
A similar calculation is performed for the taxable exchange of Blackstone Holdings II L.P. units.
The supplemental non-cash disclosure line Acquisition of Ownership Interests from Non-Controlling Interest Holders includes the adjustment to deferred tax asset and partners’ capital resulting from the measurement of the net deferred tax asset at the Blackstone ownership percentage at the balance sheet date.
Disclosure will be expanded in our 2013 Form 10-K, as deemed material in the circumstances.
Level III Valuation Techniques, page 150
Private Equity Investments, page 150
3. We note your disclosure that private equity investments may also be valued at cost for a period of time after an acquisition as the best indicator of fair value. Please respond to the following.
•
Tell us the longest period of time that you would value the private equity investment based on cost instead of based on your typical valuation techniques.
•
Tell us whether you calibrate the methodology/models used on Day 2 for the valuation of these investments with the cost paid at acquisition.
•
Tell us how illiquidity discounts are applied to these investments over time along with the factors that drive the size of the illiquidity discounts applied over time.
•
Tell us the methodology or procedure used to estimate the illiquidity discounts.
We would like to clarify that Blackstone does not have a policy to hold private equity investments at cost for a pre-determined period of time; rather, we apply the provisions of Accounting Standards Codification (“ASC”) 820 at initial recognition and in subsequent reporting periods.
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 4 of 10
On initial recognition, Blackstone determines that the transaction price represents fair value as it is derived by the application of valuation methodologies consistent with ASC 820. On Day 2 and in subsequent measurement periods, Blackstone performs an assessment to evaluate whether there have been any changes in key inputs used in the derivation of fair value on initial recognition. If there have been no changes that would result in changes in fair value, the transaction price is determined to still represent fair value.
We have modified our Private Equity valuation policy disclosure and the revised disclosure is included in our response to Comment #5.
With respect to illiquidity discounts, these are not applied to investments for which fair value is equal to the transaction price.
Funds of Hedge Funds, page 150
4. We note your disclosure that in situations where the Partnership determines, based on its own due diligence and investment procedures, that NAV per share does not represent fair value, you will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with its valuation policies. Please respond to the following.
•
Tell us the number and dollar value of funds where you have determined that NAV per share does not represent fair value at both December 31, 2012 and 2011.
•
Tell us the primary drivers considered in reaching the conclusion that NAV per share does not represent fair value for these funds.
•
In future filings, please provide additional disclosure to address the items in the previous bullets.
Blackstone consolidates certain funds which hold investments that do not have a readily determinable fair value in entities that have all the attributes of an investment company (“investee funds”). Overall, Blackstone applies the practical expedient afforded in ASC 820-10-35-39 to estimate the fair value of an investment using net asset value (“NAV”) per share of the investment without adjustment.
As of December 31, 2012 and December 31, 2011, Blackstone’s consolidated funds of hedge funds had made no adjustments to the NAVs of their investee funds.
The circumstances in which a consolidated fund of hedge funds would make an adjustment to NAV are rare. Adjustments may be made to the NAV for an investee funds’ investments where the value may not reflect fair value (for example, for an investee fund that carries its investments at cost as permitted by accounting principles generally accepted outside of the United States of America); however, these adjustments have limited impact on Blackstone’s consolidated financial statements. For example, for the years ended December 31, 2012 and December 31, 2011, we made adjustments to the NAV of certain fund investments held by an investee fund of a consolidated Blackstone Fund which had an impact on Other Income—Net Gains from Fund Investment Activities of $172 thousand and $126 thousand, respectively, which in turn had an immaterial impact on Net Income (Loss) Attributable to The Blackstone Group L.P.
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 5 of 10
We made the following revisions to the Fair Value of Financial Instruments – Funds of Hedge Funds disclosure in our June 30, 2013 Form 10-Q, page 16, (added content underlined, deleted content struck out):
Funds of Hedge Funds—The investments of consolidated Blackstone Funds’ direct investments in funds of hedge funds (“Investee Funds”) are valued at net asset value (“NAV”) per share of the Investee Fund. In limited circumstances, If the Partnership may determines, based on its own due diligence and investment procedures, that NAV per share does not represent fair value,. In such circumstances, the Partnership will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with its valuation policiesthe requirements of GAAP.
Level 3 Valuation Process, page 151
5. In your disclosures you mention the use of exit multiples as inputs in fair value estimates. Please respond to the following.
•
Where exit multiples are mentioned in the Level III assumptions table on pages 174-175, please clearly define the type of exit multiple utilized, such as an EBITDA exit multiple, P/E exit multiple, or other.
•
Please discuss how the exit multiple input is being used in the fair value estimate.
An exit multiple or capitalization rate is used to calculate a terminal value in a discounted cash flow analysis. The exit multiple or capitalization rate is applied to the relevant operating performance metric of the subject company or asset giving consideration to the long term average trading multiples or capitalization rate for comparable companies. Typically, we use an exit multiple based on EBITDA, however, in limited circumstances, we may use a price/earnings exit multiple if that measure is more meaningful to the valuation of a certain type of asset or within a certain industry. We made make the following revisions to the Level III Valuation Techniques disclosure in our June 30, 2013 Form 10-Q, pages 16-17, (added content underlined, deleted content struck out):
Private Equity Investments—The fair values of private equity investments are determined by reference to projected net earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in many cases, are unaudited at the time received. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee company such as EBITDA by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 6 of 10
pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples. Private equity investments may also be valued at cost for a period of time after an acquisition as the best indicator of fair value.
Real Estate Investments—The fair values of real estate investments are determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs among other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (“cap rates”) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow through debt maturity will be considered in support of the investment’s fair value.
We will also update our quantitative disclosures in Note 8 of our June 30, 2013 Form 10-Q to separately present the type of exit multiple used in a given fair value estimate.
Note 4—Acquisitions, Goodwill and Intangible Assets, page 161
6. We note the pro forma disclosure on page 161 showing what would have been the effect on your results of operations if Harbourmaster was acquired on January 1, 2011. Based on your disclosures, it appears that the effect on 2011 annual results would have been to increase revenues by $726 thousand and to increase the net loss attributable to The Blackstone Group L.P. by $102 million. However, based on similar disclosures contained in your For
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CORRESP
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filename1.htm
Correspondence
August 9, 2013
VIA COURIER AND EDGAR
RE: The Blackstone Group L.P.
Form 10-K for Fiscal Year Ended
December 31, 2012
File No. 001-33551
Ms. Stephanie J. Ciboroski
Senior Assistant Chief Accountant
U.S. Securities and Exchange Commission
Division of Corporation Finance
100 F Street,
N.E.
Washington, D.C. 20549
Dear
Ms. Ciboroski:
On behalf of The Blackstone Group L.P., we are responding to your comment letter, dated July 26, 2013, regarding our
Form 10-K for the Year Ended December 31, 2012 (“2012 Form 10-K”).
To assist
your review, we have retyped the text of the Staff’s comments in italics below. Please note that references to page numbers in our responses refer to the page numbers of our EDGAR-filed 2012 Form 10-K.
Form 10-K for Fiscal Year Ended December 31, 2012
Item 1A. Risk Factors, page 18
We have engaged in large-sized
investments, which involve certain…, page 39
1.
We note the recent media articles regarding the size of your investments in rental properties in the United States. In future filings, please expand your risk factor
disclosure to discuss and quantify these investments, or tell us why you believe that additional disclosure is unnecessary.
We respectfully advise the Staff that our investments in residential rental properties do not raise the issues addressed by the risk factor in question. While we do not believe that additional disclosure
is necessary at this time, we advise the Staff that we will continue to monitor our investments in residential rental properties and, to the extent such investments change the nature of our disclosed risks, including risks related to asset type
concentrations, in any material respect, we will enhance our disclosure in future filings.
The Blackstone Group L.P.
345 Park Avenue
New York, NY 10154
212 583-5000
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 2 of 10
Item 8—Financial Statements and Supplementary Data
Consolidated Statement of Cash Flows, page 142
2.
We note the supplemental non-cash investing and financing line items titled Conversion of Blackstone Holdings Units to Common Units and Acquisition of Ownership
Interests from Non-Controlling Interest Holders. Please respond to the following.
•
Please tell us whether, and if so how, these line items relate to each other.
•
To the extent the line item Acquisition of Ownership Interests from Non-Controlling Interest Holders relates to the tax receivable agreements
discussed on page 191, please tell us how, and provide us with an illustrative example of how the deferred tax asset amount is calculated.
•
Please consider expanding your disclosures to discuss in more detail what these line items represent given the significance of the amounts.
The supplemental non-cash disclosure line titled Conversion of Blackstone Holdings Units to Common Units and
Acquisition of Ownership Interests from Non-Controlling Interest Holders are related in that they both result from the exchange of Blackstone Holdings Partnership Units to Blackstone Common Units.
The Conversion of Blackstone Holdings Units to Common Units line represents the book value capital amount related to the exchange of
Blackstone Holdings Partnership Units to Blackstone Common Units. These exchanges generally occur four times a year.
The
Acquisition of Ownership Interests from Non-Controlling Interest Holders line represents the recording of the deferred tax asset, due to affiliates, and partners’ capital amounts related to the exchanges of Blackstone Holdings Partnership Units
to Blackstone Common Units. These taxable exchanges result in increases in the tax basis of tangible and intangible assets of Blackstone Holdings as a result of the Internal Revenue Code Section 754 election made by Blackstone Holdings I L.P.
and Blackstone Holdings II L.P. and the liability resulting from the tax receivable agreements that one of the corporate subsidiaries of The Blackstone Group L.P. entered into with the holders of Blackstone Holdings Partnership Units.
The tax receivable agreements provide that as the corporate taxpayer realizes a cash savings resulting from the aforementioned increases
in tax basis (i.e., through the tax deduction of amortization expense) and of certain other tax benefits related to these agreements, the corporate taxpayer pays 85% of the cash savings to the such holders who had previously exchanged units. The due
to affiliates amount represents the expected future payments under the tax receivable agreement.
A simple illustrative example
is as follows:
Partner A, a partner in the Blackstone Holdings Partnerships, exchanges 100 units of each of the Blackstone
Holdings Partnerships for 100 common units of The Blackstone Group L.P. If we assume the fair value of the Blackstone Holdings I L.P. units included in the exchange is $1,000 and the inside tax basis in the assets
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 3 of 10
of Blackstone Holdings I L.P. allocable to Partner A is $400, then the resulting increase in tax basis is $600 (in accordance with Internal Revenue Code Section 743(b)). Assume the total
increase in tax basis equals Section 197 intangibles that are amortized over 15 years. The amortization expense for the Section 743(b) adjustment is allocated to the corporate subsidiary that is the general partner of Blackstone Holdings I
L.P. The potential cash savings to the corporate subsidiary of the future amortization is $240 (assuming a 40% marginal tax rate). 85% of this cash savings, or $204, is payable to Partner A. In this example, the deferred tax asset recorded by the
corporate subsidiary resulting from the increase to the tax basis is $240, the due to affiliates is $204 and the increase to partners’ capital is $36.
In addition, in this example, the $204 payable to Partner A results in an additional increase in tax basis of $204 and the above calculation is repeated resulting in additions to the deferred tax benefit,
due to affiliates and partners’ capital.
A similar calculation is performed for the taxable exchange of Blackstone
Holdings II L.P. units.
The supplemental non-cash disclosure line Acquisition of Ownership Interests from Non-Controlling
Interest Holders includes the adjustment to deferred tax asset and partners’ capital resulting from the measurement of the net deferred tax asset at the Blackstone ownership percentage at the balance sheet date.
Disclosure will be expanded in our 2013 Form 10-K, as deemed material in the circumstances.
Level III Valuation Techniques, page 150
Private Equity Investments, page 150
3.
We note your disclosure that private equity investments may also be valued at cost for a period of time after an acquisition as the best indicator of fair value.
Please respond to the following.
•
Tell us the longest period of time that you would value the private equity investment based on cost instead of based on your typical
valuation techniques.
•
Tell us whether you calibrate the methodology/models used on Day 2 for the valuation of these investments with the cost paid at acquisition.
•
Tell us how illiquidity discounts are applied to these investments over time along with the factors that drive the size of the illiquidity
discounts applied over time.
•
Tell us the methodology or procedure used to estimate the illiquidity discounts.
We would like to clarify that Blackstone does not have a policy to hold private equity investments at cost for a pre-determined period of
time; rather, we apply the provisions of Accounting Standards Codification (“ASC”) 820 at initial recognition and in subsequent reporting periods.
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 4 of 10
On initial recognition, Blackstone determines that the transaction price represents fair
value as it is derived by the application of valuation methodologies consistent with ASC 820. On Day 2 and in subsequent measurement periods, Blackstone performs an assessment to evaluate whether there have been any changes in key inputs used in the
derivation of fair value on initial recognition. If there have been no changes that would result in changes in fair value, the transaction price is determined to still represent fair value.
We have modified our Private Equity valuation policy disclosure and the revised disclosure is included in our response to Comment #5.
With respect to illiquidity discounts, these are not applied to investments for which fair value is equal to the transaction
price.
Funds of Hedge Funds, page 150
4.
We note your disclosure that in situations where the Partnership determines, based on its own due diligence and investment procedures, that NAV per share does not
represent fair value, you will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with its valuation policies. Please respond to the following.
•
Tell us the number and dollar value of funds where you have determined that NAV per share does not represent fair value at both
December 31, 2012 and 2011.
•
Tell us the primary drivers considered in reaching the conclusion that NAV per share does not represent fair value for these funds.
•
In future filings, please provide additional disclosure to address the items in the previous bullets.
Blackstone consolidates certain funds which hold investments that do not have a readily determinable fair value in entities that have all
the attributes of an investment company (“investee funds”). Overall, Blackstone applies the practical expedient afforded in ASC 820-10-35-39 to estimate the fair value of an investment using net asset value (“NAV”) per share of
the investment without adjustment.
As of December 31, 2012 and December 31, 2011, Blackstone’s consolidated
funds of hedge funds had made no adjustments to the NAVs of their investee funds.
The circumstances in which a consolidated
fund of hedge funds would make an adjustment to NAV are rare. Adjustments may be made to the NAV for an investee funds’ investments where the value may not reflect fair value (for example, for an investee fund that carries its investments at
cost as permitted by accounting principles generally accepted outside of the United States of America); however, these adjustments have limited impact on Blackstone’s consolidated financial statements. For example, for the years ended
December 31, 2012 and December 31, 2011, we made adjustments to the NAV of certain fund investments held by an investee fund of a consolidated Blackstone Fund which had an impact on Other Income—Net Gains from Fund Investment
Activities of $172 thousand and $126 thousand, respectively, which in turn had an immaterial impact on Net Income (Loss) Attributable to The Blackstone Group L.P.
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 5 of 10
We made the following revisions to the Fair Value of Financial Instruments – Funds
of Hedge Funds disclosure in our June 30, 2013 Form 10-Q, page 16, (added content underlined, deleted content struck out):
Funds of Hedge Funds—The investments of consolidated Blackstone Funds’ direct investments in funds of hedge funds (“Investee Funds”) are
valued at net asset value (“NAV”) per share of the Investee Fund. In limited circumstances, If the Partnership may determines, based on its own due diligence and investment procedures, that
NAV per share does not represent fair value,. In such circumstances, the Partnership will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with its valuation
policiesthe requirements of GAAP.
Level 3 Valuation Process, page 151
5.
In your disclosures you mention the use of exit multiples as inputs in fair value estimates. Please respond to the following.
•
Where exit multiples are mentioned in the Level III assumptions table on pages 174-175, please clearly define the type of exit multiple
utilized, such as an EBITDA exit multiple, P/E exit multiple, or other.
•
Please discuss how the exit multiple input is being used in the fair value estimate.
An exit multiple or capitalization rate is used to calculate a terminal value in a discounted cash flow analysis. The exit multiple or
capitalization rate is applied to the relevant operating performance metric of the subject company or asset giving consideration to the long term average trading multiples or capitalization rate for comparable companies. Typically, we use an exit
multiple based on EBITDA, however, in limited circumstances, we may use a price/earnings exit multiple if that measure is more meaningful to the valuation of a certain type of asset or within a certain industry. We made make the following revisions
to the Level III Valuation Techniques disclosure in our June 30, 2013 Form 10-Q, pages 16-17, (added content underlined, deleted content struck out):
Private Equity Investments—The fair values of private equity investments are determined by reference to projected net
earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies and other measures which, in many cases, are
unaudited at the time received. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (for example, multiplying a key performance metric of the investee company such as EBITDA by a relevant
valuation multiple observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option
Ms. Stephanie J. Ciboroski
August 9, 2013
Page 6 of 10
pricing models or other similar methods. Where a discounted cash flow method is used, a terminal value is derived by reference to EBITDA or price/earnings exit multiples. Private
equity investments may also be valued at cost for a period of time after an acquisition as the best indicator of fair value.
Real Estate Investments—The fair values of real estate investments are determined by considering projected operating cash flows, sales of comparable assets, if any, and replacement costs among
other measures. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rates (“cap rates”) analysis. Valuations may be derived by reference to observable
valuation measures for comparable companies or assets (for example, multiplying a key performance metric of the investee company or asset, such as EBITDA, by a relevant valuation multiple observed in the range of comparable companies or
transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar methods. Where a discounted cash flow method is used, a
terminal value is derived by reference to an exit EBITDA multiple or capitalization rate. Additionally, where applicable, projected distributable cash flow through debt maturity will be considered in support of the investment’s fair value.
We will also update our quantitative disclosures in Note 8 of our June 30, 2013 Form
10-Q to separately present the type of exit multiple used in a given fair value estimate.
Note
4—Acquisitions, Goodwill and Intangible Assets, page 161
6.
We note the pro forma disclosure on page 161 showing what would have been the effect on your results of operations if Harbourmaster was acquired on January 1,
2011. Based on your disclosures, it appears that the effect on 2011 annual results would have been to increase revenues by $726 thousand and to increase the net loss attributable to The Blackstone Group L.P. by $102 million. However, based on
similar disclosures contained in your For