The question is at the top of everyone's mind. Rumors have circulated that the reason Goldman Sachs is not an underwriter in the Blackstone IPO is because it is skeptical of the valuation. Breakingviews.com offers an article that casts some skepticism of that number. It says advisory fees and annual fees on assets translate into a market valuation of about $16 billion. The other $24 billion would have to come from that third revenue stream, carried interest, the percentage (usually 20 percent) that they keep of profits. After taxes, this comes out to $1.5 billion last year. So the issue is the multiple. At 16 times, yes you can get the whole firm to $40 billion, but not if you assign a lower multiple. So the issue is how will the market perceive the carried interest revenue.

For more:
- here's the article from Breakingviews.com