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Today’s edition is dedicated to the memory of Derek Sword, a talented banks analyst who died 25 years ago today in his office at Keefe, Bruyette & Woods on the 89th Floor, South Tower, 2 World Trade Centre, Manhattan, New York, USA. I’ve said before that if you want to understand what’s going on inside the finance industry, a good place to start is in the filings of Apollo Global Management. So when a book about Apollo is published, I’m going to read it. Bill Cohan’s Money to Burn is actually two books in one. Half of it charts the rise and fall of Apollo’s founder, Leon Black, from the high profile suicide of his father through his stint as head of M&A at Drexel Burnham Lambert, to the launch and growth of Apollo and his ultimate downfall. How someone who, by his own admission, has one of the best noses for value that exists ends up paying Jeffrey Epstein $158 million for financial advice that was available on the Street for $5 million is a mystery that is left unresolved. Cohan spent hours with Black (and his two “handlers”) researching his book and he conveys at least two theories. But he also reports on “salacious and grotesque” allegations – to which he attaches a trigger warning – that may lead readers to infer a third.1 The drier half of the book charts the rise and rise of Apollo and it’s the part that’s fundamentally more interesting. Apollo now steers more than $1 trillion of assets. It straddles insurance and asset management. Former Head of Strategy, Gary Parr, tells Cohan that the firm’s mission is nothing less than John Pierpont Morgan’s from a hundred years ago. “He moved businesses around. He helped create U.S. Steel and GE. He had his hands in a lot of aspects and he had a balance sheet to do it with.” The overlap with the Black half of the book is that none of this would have been possible had he still been in charge. “I’ve never been that strong in taxes and insurance,” he tells Cohan. One of his friends tries to reassure him: “You ought to be thankful for the Epstein stuff. This whole Epstein thing. Where would you be today if this Epstein stuff hadn’t happened? You’d still be running Apollo. The stock would be half of what it is. Marc Rowan was half out the door already. So he would have been gone. You’d be stuck with Josh Harris. And you’d be miserable. And instead, the stock is three times where it was when you stepped down, right? The company’s doing great. You’re free to build the next chapter of your life.” I guess we all need friends like that. What this half of the book elucidates are the deals that made Apollo what it is. I reckon five deals capture the essence of the firm – Executive Life, Caesars, LyondellBasell, Athene, and Intel. To see what each one contributes to the making of Apollo, read on.
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