(Bloomberg) -- John Kissick, a builder of private equity giants Apollo Global Management Inc. and Ares Management Corp. and the last leader of Michael Milken’s high-yield group at Drexel Burnham Lambert Inc., died earlier this year. He was 82.

Kissick, who had suffered from a degenerative disease called frontotemporal dementia since 2018, died on Feb. 29, his family said. His death hadn’t been publicly reported since then.

Kissick was an early star in the private equity and credit industry, which has attracted trillions of dollars in assets, along with regulatory scrutiny. He stood out among the alpha males of the dealmaking industry because of his rectitude.

“He would always take a moment before we approved a transaction and ask everyone if it was the right thing to do,” Tony Ressler, who was hired in 1985 by Kissick at Drexel and also co-founded Apollo and Ares, said in a video tribute shared on YouTube by Kissick’s daughter. “And no one did that.”

Apollo and Ares grew from scrappy, upstart buyout shops into publicly traded Wall Street mainstays that manage the money of pensions, university endowments and high-net-worth investors. Apollo had assets under management of $671 billion at the end of the first quarter. Ares managed $428 billion. 

At Ares, Kissick was a senior executive who served as a mentor rather than a fundraiser or deal finder. On the investment committee, Kissick advised what to pursue and to avoid, including steering Ares away from putting money into subprime mortgages that fueled the 2008 housing market crash.

“We chose what not to go into — what we didn’t understand — so we avoided pitfalls,” Ressler said in an interview. 

Kissick stepped down from the Ares board in 2020. 

He had a formative experience years earlier at Drexel, once among America’s biggest and best-known investment banks.

LA Office

Recruited to the firm in 1975 by Chief Executive Officer Fred Joseph, Kissick opened its corporate finance office in Los Angeles two years before Milken moved the junk bond operations there from New York, the Los Angeles Times reported in a 1989 profile. 

As the firm’s senior executive on the West Coast, Kissick landed dozens of companies as Drexel clients, bringing in millions of dollars of revenue, the Times said.

But it was Milken, working from an X-shaped desk in the Los Angeles office, who turned the bank into a power player in the risky, high-yield field of “junk” bonds — corporate bonds with a high risk of default based on the borrowers’ credit ratings.

Starting in 1980, Milken hosted an annual high-yield conference in Beverly Hills, California, where he extolled the merits of junk bonds and the democratization of capital. By 1985 the conference had become a signature event that drew several thousand investors and entrepreneurs. The event was memorialized in Connie Bruck’s 1989 book, The Predators’ Ball.

Based on information from arbitrager Ivan Boesky, a Milken client, Drexel was accused of stock fraud by the Securities and Exchange Commission in 1988. After Milken was criminally charged with securities fraud and trading illegally on insider information, Kissick — who had no experience as a bond trader — took over as head of Drexel’s corporate finance department. 

‘Take the Bullet’

Former colleagues remember Kissick for stepping up in a difficult time. “John’s first instinct was to jump in and take the bullet,” Ken Moelis, who worked under Kissick at Drexel before founding his eponymous investment bank, said in the tribute video.

Mark Attanasio, a Drexel alumnus who went on to co-found Los Angeles-based private credit firm Crescent Capital Group and to buy the Milwaukee Brewers baseball team, recalled seeing Kissick cleaning a sink in the office, concerned about clients getting a bad impression.

“The guy runs the office, has a national reputation and he’s cleaning the sink,” Attanasio said in the video. “So it taught me no job is too small.”

Fortune magazine, in a 1990 article, said Kissick in late 1988 was a lonely voice within Drexel leadership urging the firm to fight the government’s charges rather than settle. This was at a time when Joseph, the CEO, was becoming convinced that settling the charges was the firm’s best chance at survival.

“Hugely popular within the firm,” Fortune wrote, Kissick “was torn between supporting Joseph — the man who had been his mentor — and Milken, the man who was his friend.”

Drexel’s End

Milken pleaded guilty to securities violations and served 22 months in prison. He was pardoned in 2020 by President Donald Trump. 

Drexel filed for bankruptcy protection and shut down in 1990 after pleading guilty to six felony counts of mail and securities fraud and agreeing to pay $650 million in fines and penalties. That same year, Kissick joined Drexel alumni including Ressler, Leon Black, Josh Harris and Marc Rowan to start Apollo, named after the Greek god of the sun. 

Seven years later, he teamed with Ressler, Mike Arougheti, David Kaplan and Bennett Rosenthal to found Ares, named for the Greek god of war.

Apollo and Ares brought Milken’s financial innovations to a new level, taking risks and filling gaps left by more highly regulated banks; trading debt, real estate and corporate holdings; managing the fortunes of insurance affiliates and high-net-worth retail clients as well as institutional investors; and generating massive fees that turned the founders into billionaires. 

Kissick remained close with Milken.

“John was an exceptional human being who represented the best in everything he did,” Milken said in an email. “It was a privilege to call him my friend.” 

Stanford MBA

John Harold Kissick was born on Jan. 3, 1942, in Washington, DC, attending public schools through 11th grade in suburban Maryland. His senior year in high school was in Ankara, Turkey, where his father, who worked for the State Department, had been assigned.

Kissick graduated from Yale University in 1964 with a bachelor’s degree in economics, served four years in the Navy during the Vietnam War and earned an MBA in finance from Stanford University in 1970. 

The Kissick Family Foundation is collaborating with the Milken Institute to fund research into frontotemporal dementia, a currently incurable disease that also afflicted actor Bruce Willis and television talk show host Wendy Williams.

Kissick served on charitable boards including at Stanford, Cedars-Sinai Medical Center and Harvard-Westlake School. 

Survivors include his wife of 41 years, Kathy; children Ryan and Kasey Kissick; a brother, Ralph Kissick, a sister, Jean Pappas; and three grandchildren.

Ressler, the Ares and Apollo co-founder, called Kissick “one of those truly special people that operated on Wall Street for 40 years and was only liked and respected by everyone he did business with — which is unusual.”

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