More on the Blackstone IPO Saga...Tax Issue

With the recent news of Blackstone's teflon coating, here is a great summary, courtesy of Bloomberg.com;

Reading Fine Print
Tax experts say the strategy used by Blackstone is commonly employed and is fair because the founders of the firm are effectively being reimbursed for the decline in value of their intangible assets that results from the sale.
The fact that new shareholders are ultimately bearing the burden should have been reflected in Blackstone's initial purchase price, said Victor Fleischer, a University of Illinois law professor who is advising Congress on the tax treatment of hedge funds and buyout firms.
``In a fully efficient market, one would expect Blackstone investors to read the fine print of the prospectus and discount the pricing of the IPO shares and aftermarket shares accordingly,'' Fleischer said. ``Whether that actually happened, of course, is hard to say.''

With the onslaught of IPOs in these kinds of companies coming up (e.g. KKR, etc.), read the fine print, and figure the price you are willing to pay, based on sound financial information. It will save you some headaches when you look at popping with IPOs.