Business model of The Blackstone Group

Customer Segments

Blackstone serves a range of clients across multiple demographics and business sectors. These customers include:

• Individual Clients, primarily high-net-worth individuals, to which it provides a range of asset management services;
• Corporate and Commercial Clients, to which it provides fund management, advisory and corporate restructuring services; and
• Public and Government Clients, to which it provides fund and asset management, and advisory services.

Blackstone is reported to have provides services to a number of high-profile corporate entities, including advisory services to Microsoft, Comcast, Procter and Gamble, Sony and Verizon, and restructuring services to Xerox, and General Motors.

Blackstone invests globally serving clients from around the world, including customers across the Americas, Asia Pacific, Europe, the middle East and Africa.

Value Propositions

Blackstone provides value to its customers in the following ways:

• Its reputation and prestige, with the Company an established industry leader, and a preferred player for a number of high-profile commercial entities, as well as public bodies;
• Its technical expertise and experience, with the Company employing highly-trained specialist staff across its four operating segments, with a wealth of experience in dealing with a full spectrum of asset classes and industries;
• Its broad international reach, with the Company actively in engaged in management and advisory services across the Americas, Europe, Asia, the Middle East, and Africa, and serving a global client base; and
• Its successful track record, with the Company having a track record of providing reliable risk-adjusted returns for its customers across a broad and expanding range of asset classes and through all types of economic conditions.

Channels

Blackstone operates a website at www.blackstone.com, through which it provides information to its customers on its suite of asset management and advisory services, as well as on its funds and management personnel. The Company also operates an online investor portal, named BXAccess, which enables the Company’s clients to view their holdings and utilise various tools, including analytics.

Blackstone provides its services to clients directly, with the Company’s investment management professionals consulting directly with customers through teams organises by region, business segment and asset class. The Company seeks to serve its clients locally, often in person, through its network of offices that spans New York, Beijing, Dubai, Dublin, Düsseldorf, Hong Kong, Houston, London, Los Angeles, Madrid, Montecito, Mexico City, Mumbai, Paris, Sao Paulo, Seoul, Shanghai, Singapore, Sydney, Tokyo and Toronto.

Customer Relationships

Blackstone offers some tools and functionality to its clients on a self-service basis through its BXAccess platform. This channel allows customers to view and assess their current holdings, and track various funds and assets, without interacting with members of the Blackstone investment team.

The majority of Blackstone’s business, however, is done through direct dealings with clients. The Company consults with its customers over a period of time in order to establish an understanding of each client’s individual needs, limitations, and aversion to risk. The Company seeks to develop collaborative relationships with its customers, in order to secure long-term recurring business.

Blackstone provides ongoing support to its clients, who are often assigned their own team of investment professionals. Potential and existing customers can also access more general assistance from the Company’s support staff, who are contactable by phone and by email. Blackstone also offer an email alert service to clients, that notifies them when the Company posts press releases or market commentaries.

Additionally, Blackstone is able to keep its customers updated with corporate and industry developments through its blog and videos hosted on its website. The Company also operates social media accounts with Facebook, LinkedIn, Instagram, and Twitter, through which it can interact directly with customers.

Key Activities

Blackstone is a global alternative asset management firm. The Company's alternative asset management businesses include investment vehicles focused on private equity, real estate, hedge fund solutions, non-investment grade credit, secondary funds and other multi-asset class strategies.

Its operations are organised into four separate business segments: Private Equity, which includes corporate private equity funds, tactical opportunities, strategic partners, the and Blackstone Total Alternatives Solution; Real Estate, which manages global, European and Asian focused opportunistic real estate funds, real estate debt investment funds, and core and real estate investments; Hedge Fund Solutions, which comprises the activities of Blackstone Alternative Asset Management; and Credit, which comprises the activities of GSO Capital Partners LP.

Key Partners

Blackstone collaborates with a range of companies and organisations in the provision of its various services. The Company raises funds and investment commitments using a partnership structure, under which investors or funds, known as limited partners, subscribe to investment vehicles by committing their own funds.

Commitments are drawn down whenever the company has to fund an investment over a specified term. While these partners are key to funding the Company’s operations, they do not take part in the operation or control of Blackstone’s investment funds.

Blackstone also has a range or more broad partnerships, including:

• Service Partners, comprising companies that provide a range of out-sources services to the Company, including non-technical administrative and management tasks; and
• Strategic and Alliance Partners, comprising a range of companies with which the Company shares tools and resources and collaborates on joint venture projects.

Key Resources

Blackstone’s key resources are its funds and financial resources, its technology and communications infrastructure, its network of regional offices, its partnerships, and its personnel.

The Company operates a network of leased offices across the Americas, Europe, Asia Pacific, the Middle East, and Africa, that allows the Company to operate locally, and employs a complex communications and technology infrastructure that helps to ensure its financial activities are completed quickly and efficiently.

Cost Structure

Blackstone incurs costs in relation to the operation and maintenance of its IT and communications infrastructure, the operation of its physical network of offices, the management of its partnerships, the management of its funds, and the retention of its personnel.

In 2015 Blackstone’s largest cost related to its compensation and benefits expenses – including the payment of salaries to its workforce of 2,060 people, which totalled $2.29 billion. The Company also accrued interest expense in the amount of $144.52 million, and fund expenses totaling $75.00 billion.

Revenue Streams

Blackstone generates revenue through the provision of various asset and investment management services. This includes revenue derived from the collection of management and advisory fees, performance fees, investment income, interest, and dividend revenue.

In 2015 Blackstone generated $4.65 billion in annual revenue, down significantly on the $7.48 billion recorded by the Company in 2014. More than half of the Company’s revenue is derived from the collection of management and advisory fees, which accounted for $2.54 billion in revenue in 2015. This was followed by the collection of performance fees in the amount of $1.80 billion, with investment and interest income amounting to $204.64 million an $102.74 million respectively.