Revolutionizing Private Equity

Blackstone, the global investment giant, is revolutionizing employee engagement by granting equity to rank-and-file employees at the companies it acquires.

Program Details

Executives have revealed that this new initiative will provide equity to most employees in Blackstone’s large U.S. buyouts. Set to be announced at an investor conference this week, the program will apply to all future deals where Blackstone’s private-equity division gains control of a company.

Industry Context

This move aligns with a growing trend in the private equity industry, where firms are increasingly extending ownership beyond the management ranks. Blackstone’s $143 billion private-equity business, which employs over 400,000 people through its portfolio companies, is at the forefront of this shift.

Case Study-Copeland

The initiative is launching with Copeland, the former climate-technologies division of Emerson Electric, which Blackstone acquired last year in a $14 billion transaction. Approximately 18,000 Copeland employees, who manufacture products for commercial and residential heating, cooling, and cold storage, will be the first beneficiaries.

Conditions and Incentives

To qualify for the equity payout, employees must remain with the company until Blackstone either sells it or takes it public. The payout amount will be directly linked to Blackstone’s return on the investment.

Comparison and Context

Blackstone’s strategy echoes the path taken by rival KKR, which pioneered broad-based employee ownership in 2011. KKR extended these programs across its U.S. portfolio companies and further promoted shared ownership through the nonprofit Ownership Works, launched by KKR’s Pete Stavros in 2022. Ownership Works has since attracted 19 private-equity firms as founding partners, committing to implement shared ownership in at least three companies each by the end of 2023.

Blackstone’s Unique Approach

Despite not joining Ownership Works, Blackstone has promoted broad-based ownership in companies like Merlin Entertainments. Joseph Baratta, Blackstone’s head of private equity, said this initiative is part of a strategy to support lower-level workers. In 2020, Blackstone started recruiting individuals without degrees, veterans, and refugees.