Apollo

In nineteen ninety, Leon Black watched Drexel Burnham Lambert collapse around him. He had been its star dealmaker. Now the firm was gone and corporate America was littered with broken companies carrying bonds no one wanted. A bond issued at one hundred dollars traded at thirty. Black did not see wreckage. He showed inventory priced for liquidation. He started buying. Apollo raised its first fund and bought distressed debt. A bond purchased at thirty cents recovered to seventy or eighty as the company stabilized. Capital doubled in two years. Early funds returned fifty to two hundred percent. The pattern repeated every cycle. When markets seized, Apollo deployed. When markets recovered, Apollo collected. Fear was the raw material. The fee structure made Apollo rich whether deals succeeded or not. Management fees ran one point five percent on assets — on six hundred and fifty billion, that meant nine hundred and seventy-five million a year before a single investment paid off.