Anyone who has been investing for long periods of time knows the secret to success -- which is low price. If you buy a fundamentally good business at a low price, you will ultimately make money.... The irony is we all know this as investors, particularly in private equity, and we have a capital base that's 10 or 12 years that allows us to pick our spots in time. But it is ironic that with all these industry professionals, and all this capital structure in place, most money is not invested when prices are low. Most money is invested when prices are high. That's, after all, when there is confidence in the economy, when there is financing, when, quite frankly, businesses want to be sold. The challenge for private equity and investors generally is to have the courage of their convictions, and to come up with strategies for investing when prices are low and liquidity is not available.
For us at Apollo, the strategy that we have relied on for the past 20 years is distressed. Most of the founders of our business come out of the debt business. Rather than looking for acquisitions in the traditional private equity fashion during these periods of time, we employ our fixed income skill set. We go in and we buy the debt, bank debt, subordinated debt, of fundamentally good businesses that are overlevered, and we work through a process with creditors -- sometimes in bankruptcy, sometimes out of bankruptcy -- and we end up, hopefully, backing into control of a fundamentally good capital structure at a good price.