Each investor involved in a company’s blind group is free to pursue other business interests.
As a form of limited company popular in recent decades, the group blind is an arrangement that allows the creation of a publicly traded company that is not limited to a single purpose. Each investor in the company is considered a general partner, free to pursue other business interests and must be open to diversification when it comes to investments made by the company.
One of the advantages of the blind group is that it allows a group of investors to come together with the objective of forming a legal entity that can actively seek opportunities that result in the generation of profits for all partners. While the blind group does not revolve around a core investment or product, there are several examples of public companies that have developed a significant good or service over time. At a later date, the blind group would add new goods or services to the list of products offered, and the additional products would have some sort of relationship to the main offer. In other cases, the blind group would include an eclectic selection of products that are sold under the auspices of one company but make a profit in a variety of different markets.
During the 1980s, the use of a blind pool was a common method of taking a private company public. Often the process would involve a reverse split of the shares in control of the partners involved with the blind group. The split would be followed by the issuance of new shares that could be purchased and used to acquire a majority stake in the new publicly traded company. While the process tended to seem like a viable approach on paper, actual practice could often result in partners losing money in the transaction. As a result, the blind pool is discouraged as an investment strategy in many countries around the world. In the United States, the Securities and Exchange Commission now actively opposes the use of blind groups as a means of taking a private company public.