Brian Sozzi: The job is open. So talk to us about deal making. I think the Fed signaled one more rate cut for next year, whatever it is. They are cut rates by 175 basis points now. What does it mean for deal making?

Scott Kleinman:  Yeah. Look, it's actually been a pretty good environment for deal making over the last couple of years. You got to separate what's in the inventory of private equity portfolios and new deals. That 18 to 22 timeframe when rates were, like I said, essentially 0% cost of capital, you had a lot of great companies purchased by the private equity industry, but at pretty lofty valuations. And so private equity inventories are pretty full right now. For the last couple of years, it's been more difficult for the typical private equity firm to sell assets because that rate move has changed the valuation environment. And so you have portfolios full of good companies, but bought at the wrong price.

I think as rates start to creep down a little bit, that will allow a little bit more companies out of inventory, if you will. I also think the passage of time helps. Companies can grow into these loftier valuations that folks were hoping for. Fortunately in Apollo, I like to joke, we never got the memo that the cycle was going to last for 15 years. So we stayed true to our value orientation and that's allowed us to actually be exiting even in this environment. And so like for example, we've had four IPOs since Liberation Day. We've continued to sell assets and feel pretty good about that. As far as new deals go, no, it's a pretty good time to be buying stuff.

Brian Sozzi: What sectors do you think? What attracts you right now?

Scott Kleinman: For us, we are opportunistic investors. We look for where there's interesting value. And so notwithstanding the S&P sort of hitting new records every couple of weeks, it really is concentrated in a handful of aims. If you look back at sort of the S&P up 25% last year, teens this year, that performance is not spread evenly. You have 10 stocks that were up 50 plus percent last year, and I think the average company in the S&P was up 6%. A third of the S&P was down last year. So you have a lot of interesting companies, industrials and consumer financial services that have not really seen the type of performance that the headline S&P numbers have shown.

Brian Sozzi: Exits have picked up, which is, I imagine, good for your industry. Is next year the year of the big exit? Do you see that momentum continuing?

Scott Kleinman: Yeah, I think it will continue. I don't think it's going to be a whopper of a year or materially better. But every year that passes where a recession doesn't come, you have companies that are just continuing to grow accrete into those valuations I was referring to earlier, and that allows sponsors to sell a little bit more out of their portfolio. So I think it's the passage of time more than anything else, unless we believe we're going back to a zero rate environment, which I don't think. Then I think you'll see marginally better, but rates are still going to be 3.5%. They're not going back to zero.

Brian Sozzi: What is the secret sauce on knowing when to exit? What do you look for specifically? How do you know the environment is right to sell a portfolio company?

Scott Kleinman: Yeah. For us, because so much of our investments are based on like an investment thesis, we're buying a company that needs a transformation that is trying to get from point A to point B, we're typically looking to exit when we've mission accomplished. We've achieved the big lift that we're trying to achieve.

The beauty of private equity is you don't have to be market timers. You don't have to get the timing perfect if you've paid a reasonable valuation on the way in and you've created a lot of good things along the way. And so it's less about the perfect timing, although when the perfect market conditions exist, it may not be according to your schedule. And so sometimes you have to lean in and just say you got to make hay when the sun is shining.

Brian Sozzi: Lastly, you've been at Apollo since what, 1996?

Scott Kleinman: Correct.

Brian Sozzi: How has the private equity industry, how's it changed? What's the biggest change you've seen?

Scott Kleinman: Yeah, well obviously the scale. When I started 30 years ago, private equity was a cottage industry. Maybe it represented half a percent of GDP. Today, I've seen stats somewhere between 10 and 15% of GDP is private equity owned companies. And so it's just a much bigger part of the whole ecosystem, obviously the scale in which you can do transactions.

The beauty of Apollo is though, the secret sauce that made us great 30 years ago is what holds true today. Find good companies, pay a reasonable price for them, operate them well, and be thoughtful about when you exit.