Business Breakdowns
· Hunter Hopcroft
[00:00:00] S1: I don't mean this pejoratively, but I think in a lot of ways, especially as they've pursued Rowan's vision for the business, they've effectively remade a lot of what made Drexel successful in terms of innovating around these capital structures, innovating around sources of capital, and innovating around how the market functions. And so, just like how Caesars Palace didn't work and they went right back and did Las Vegas Sands, I think they have internalized these lessons all the way back from the beginning of their career, and they saw what worked and what didn't. They have really come full circle into being this huge player in debt markets that is reshaping how financial markets operate. I think the other thing that is becoming more and more important, especially in this environment, is an understanding that the balance sheet is a huge value driver for businesses and for Apollo, how that balance sheet can be self-perpetuating. There is a focus in markets on the income statement. How much earnings are you driving? What multiple can you get on those earnings? And for Apollo and for the market at large, I think there's a lot more realization that a lot of value gets created in asset conversions, in refinances and M&A's, and in changing the capital structure and allocating through the balance sheet, not necessarily just having a rapidly growing top line that gets a multiple applied to it. And then finally, I think Apollo's own history charts the evolution of markets at large probably better than a lot of the other alternative managers do. They started in this debt collapse in the late '80s. They were opportunistic then. They were set on the course they are on today following the collapse of the Great Financial Crisis and its impact on insurers. And now they have moved into the debt-centric market we have today as a leader. So Apollo's rise and fall, and becoming who they are today, really charts how markets themselves have evolved in terms of the growth of private capital and the focus on credit and yield as growth areas. Relative to public equity, but maybe even private equity.
· Matt Reustle, Hunter Hopcroft
[00:00:00] S0: You summed it up nicely there. It's interesting to think about that original quote in the DNA that's still in the business. And it's fun because there's a great history. But it's also going to be a lot of fun to watch how this evolution goes and plays out over time. Thank you for sharing the knowledge. This lived up to my high expectations for an episode. Appreciate it, Hunter. [00:00:00] S1: A lot of fun. Thank you, Matt.