It’s certainly not for investors who are faint of heart, but private equity powerhouse The Blackstone Group is selling a portion of its equity in a widely-discussed initial public offering. Who better to dissect the delicious irony of a firm that specializes in taking public companies private making its own public offering than Larry Ribstein, who has been predicting for quite some time that partnership-type business entities would evolve to reshape the modern corporate entity. In this American.com piece, Professor Ribstein notes the implications of the Blackstone IPO for the future of the public corporation:

. . . [W]e shouldnít be surprised [by the Blackstone IPO]. The public offering is a glimpse into a business that is fundamentally transforming, and perhaps replacing, the modern corporation.
As Blackstone emphasizes in its offering materials, its proposal would create a different kind of public firm. Blackstone is not so much going public as going ìprivlic.î Initial public offerings once transferred control from entrepreneurs to dispersed public investors. Blackstoneís IPO doesnít transfer a smidgeon of control. . . . If all this seems confusing, the prospectus is at least clear about the bottom line: the real power at Blackstone lies above and below the publicly held entity thatís being inserted in the middle. The public investors can’t elect or replace the manager of their own firm, let alone those of the lower-level holding companies and the still lower level operating companies in Blackstoneís gigantic portfolio. Any voting power the new limited partners have amounts to a right to be outvoted by the existing owners. [. . .]
While the business columnists prate about ìshareholder democracy,î this prospectus shows us where business is really headed. These partnerships make publicly held corporations, which activists disparage as dictatorships, look like New England town meetings. The owners are not protected by voting, shareholder proposals, majority voting for directors, or any of the other paraphernalia of the publicly held firm. Rather, the ownersí solace lies in the regular distributions of cash, the managers’ high-powered incentive compensation, and the portfolio companiesí debt load, which concentrates their managersí attention producing enough cash to avoid bankruptcy. [. . .]
In short, vast chunks of corporate America are devolving back into the partnership form from which they grew back in the 19th century. This should not be so surprising. There were always tradeoffs between the benefits of diffuse public ownership of firms and the costs. Public markets enabled entrepreneurs to capitalize their ideas, owners to diversify risk, and information to be rapidly discounted in the price of firmís securities. But since thousands of diffuse owners cannot easily watch over their firms, managers are left free to serve themselves. Devices like independent directors, auditors, and takeovers might mitigate the problems, but they have costs and weaknesses, too. Hence the repeated calls for more managerial accountability, coupled with escalating regulation and criminal and civil liability. Blackstone and other private equity firms replace this whole structure with a new approach to accountabilityóexpert monitors, strong incentive compensation, and a commitment to distribute excess cash.

Read the entire piece, which is an example of how the blogosphere and the Internet are changing the way in which specialized information is processed and distributed. As recently as just a few years ago, this type of analysis would be found buried in the op-ed pages of a bricks and mortar publication such as the Wall Street Journal or Forbes, and even then the op-ed would likely come weeks after the announcement of the corresponding event. Now, the Blackstone IPO is announced last week and, by this week, multiple experts around the blogosphere and the Internet have provided extensive analysis and discussion of the legal and business issues raised by the IPO for all the world to see. Business law academics such as Professor Ribstein and Stephen Bainbridge have been at the forefront of this remarkable development, which is literally redefining the way in which the informed public will come to understand and act on important issues of our day and the future.
That’s a pretty darn good legacy in my book.