(Bloomberg) — Blackstone Group Inc. Chief Executive Officer Stephen Schwarzman said the risk of an increase in U.S. capital gains taxes has led to explosive growth in potential targets for his alternative investment firm, as corporate owners look to cash in ahead of any legislative changes.
“It’s really like an avalanche now of opportunities — people want to sell things before their taxes are much higher for selling the same thing, potentially next year,” Schwarzman said in a virtual panel discussion at Bloomberg’s Qatar Economic Forum. “It’s giving us a lot of opportunities, and what we have to do is be careful, always have a very exciting plan for growth.”
Blackstone, along with Carlyle Group Inc. and Hellman & Friedman LLC, reached an agreement earlier this month to buy a majority of Medline Industries Inc. for more than $30 billion, in what would be among the largest leveraged buyouts of all time. Bloomberg News reported this week that the Mills family was motivated to sell some of their stake in one of the nation’s largest private companies in part because of the threat of additional capital gains taxes.
Read more: A record buyout is just the start as wealthy flee tax hike
It’s not just taxes: Higher corporate valuations are also a strong motivator for people to sell their businesses, Schwarzman said.
“The U.S. economy is really on fire, almost everything is growing much faster than almost anyone anticipated,” he said.
Americans may face persistently higher inflation than they’ve been accustomed to because employers have had to pay to bring workers back in front-line industries, Schwarzman said. That aligns him with other speakers at the forum, including former Treasury Secretary Lawrence Summers and billionaire investor Ray Dalio, who see a risk of overheating and inflation.
Schwarzman said wages are “most concerning” because the benefits that workers have received through stimulus programs have discouraged some from returning to work.
“It’s very difficult to reduce people’s compensation,” he said. “So I think some of the inflation will be baked in at higher levels than we’ve certainly experienced in the past decade.”
Schwarzman chose to deflect a question on crypto: “I leave that to Elon Musk,” he said.
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