Leon Black makes way for one of his disciples at Apollo

The two men spent decades tracing the same path to riches and power -- from Wharton to Michael Milken and finally to Leon Black, one of the most feared dealmakers in the business.

But now the path has diverged for Marc Rowan and Joshua Harris, with only one of them emerging as Black's anointed heir at the mighty Apollo Global Management Inc.

The winner: Rowan, the quiet strategist behind some of the private-equity giant’s most lucrative plays. Harris, his extroverted younger cofounder and co-owner of the Philadelphia 76ers basketball team, has been passed over.

Rowan, 58, made his formal debut as Apollo's chief executive-designate this week, after Black promised to step aside following the controversy over his dealings with the late Jeffrey Epstein, the convicted sex offender and self-styled "financial doctor" to the rich.

"Leon, Josh, and I have been together and been partners for more than 30 years," Rowan said on a call with analysts Wednesday. "We have been through all kinds of market cycles and all kinds of events, and I expect our partnership to endure for a very long time."

Time, indeed, will tell. Harris, 56, has in the past shown an interest in potentially taking over as CEO. Following an outside review, Harris expressed concerns that the extent and scale of Black's financial relationship with Epstein could further hurt Apollo's reputation. The Epstein controversy has dragged on Apollo's stock price, which has lagged behind peers and has gained 6.3% in the last 12 months.

Harris advocated that Black should give up his chairman and CEO posts, making the case directly to Black and Rowan, and at least one board member. In the end, Black and his board picked Rowan, a choice that Harris ultimately backed. Black remains chairman -- and, for the time being, the ultimate power inside Apollo.

Until now, Rowan has largely avoided the spotlight, which has been trained squarely on Black for decades. The coming year will present a new -- and very public -- set of challenges.

"If you put a television camera in front of Marc, he would want to get away from the television camera," said Adam Aron, the CEO of AMC Entertainment Holdings, the world's largest multiplex chain, who has worked with Apollo over the years.

The shifting power dynamics inside Apollo could present challenges of their own. Rowan and Harris have labored in each other’s shadows for their entire careers. Rowan graduated from the Wharton School two years ahead of Harris, and, before long, the two ended up working with Black at Milken’s junk-bond powerhouse, Drexel Burnham Lambert. In 1990, the trio formed Apollo, with Black firmly in charge.

Now, after revelations that Black paid $158 million to Epstein for various financial services, the crown will pass to Rowan no later than July.

People who know the pair say Rowan and Harris cut starkly different figures. A competitive wrestler in college, Harris is known for logging long, intense hours. Pre-pandemic, he often kept a line of people waiting outside his 43rd-floor office. In addition to the 76ers, he is an owner of the New Jersey Devils hockey team and Crystal Palace, the English Premier League soccer club.

Rowan, by contrast, is more reserved. He prefers golf and long bike rides. Rather than sports teams, he owns two restaurants out in the Hamptons, Lulu Kitchen & Bar and Duryea's. His emails and texts are notoriously terse. His usual signoff -- the "Mark of Zorro," as one friend puts it -- is "TXMR."

Harris has been fabulously successful as a dealmaker and investor. But Rowan is widely regarded the better strategist, as well as the financial engineer who has helped vault Apollo to the pinnacle of its industry.

Aron recalled how Rowan once approached an investment in Vail Resorts Inc., the Colorado ski outing business. Having noticed that snowfall was unusually light one season, he found special business insurance via Lloyds of London that eventually paid out handsomely.

"Only Marc Rowan would have thought of finding snow insurance," said Aron.

Rowan’s greatest triumph has been Athene Holding Ltd., Apollo’s money machine. Taking a page from Warren Buffett’s playbook, Rowan devised the insurance company to throw off vast sums that Apollo could then use for investments. Athene is one reason that Apollo today is the envy of the private-equity business.

"He is usually thinking three steps ahead," Eric Zinterhofer, a former member of Apollo's private-equity team, said of Rowan.

Apollo's strategist has stirred controversy along the way. The investment firm's relationship with Athene, for instance, has prompted scrutiny over fees and potential conflicts of interests.

During the bankruptcy of Caesars Entertainment Corp., meantime, a court-appointed examiner found that Apollo and Rowan had crossed the line by shifting assets away from lenders (Apollo and Rowan denied any wrongdoing).

Apollo investors don't seem to mind. Several years ago, Rowan told a nonprofit group that people keep pouring money into Apollo because it delivers good returns.

"Notwithstanding the fact they might not like what we are doing, strategy-wise," Rowan added.

On Wednesday's call with analysts, Rowan vowed that Apollo would be more transparent after all the headlines over Black's dealings with Epstein. An internal investigation found Epstein never did business with Apollo itself.

“Proper governance and transparency are going to be essential to play the role that we are supposed to play in this marketplace,” said Rowan.