Apollo's private equity team proactively de-risks investments by targeting the return of 40% of deployed capital within the first 24 months. This strategy, identified in a strategic review, correlates directly with their best-performing funds and investments by dampening volatility in uncertain markets.
While secondaries and continuation vehicles have surged to account for 20% of PE exits, David Sambur views this as an unsustainable peak caused by weak M&A and IPO markets. He predicts the market will normalize to a more sustainable equilibrium of around 10% of total exit volume over time.
Apollo uses its diverse portfolio companies as a 'test kitchen' to experiment with new technologies and processes like AI-driven customer service. Best practices are then identified, shared across the portfolio, and ultimately integrated back into Apollo's own internal operations for investing and management.
Apollo mandates that its own teams apply the same rigorous 'clean sheet thinking' it expects from portfolio companies to all internal processes. This involves constantly questioning everything from investment screening to LP reporting, ensuring the firm itself operates with the same innovative intensity it preaches.
To mitigate risks from volatile debt markets, Apollo created an internal team for direct debt placement. This insulates them from periods when traditional capital markets shut down, allowing them to control a critical variable in their investment underwriting and execution process, rather than being dependent on external factors.
PE firms are stuck in software investments like homeowners with low-rate mortgages. Assets were bought with cheap financing at high prices that are no longer available. Sellers can't accept lower prices, and buyers can't get financing to meet the asking price, creating a market-wide exit logjam.