Jeff Aronson – Building Centerbridge Across the Capital Structure

**Jeff Aronson** (0:00)
When you're on a hot streak like that, and you think you can do no wrong, risk is rising. Even though mentally you're thinking, oh, I must be good, I got this, I got it covered.

**Ted Seides** (0:17)
I'm Ted Seides, and this is Capital Allocators.
My guest on today's show is Jeff Aronson, co-founder and managing principal of Centerbridge Partners, a $43 billion alternative investment firm he started in 2005 after two decades at Angelo Gordon. Jeff's career spans 40 years of investing across credit and private equity through multiple market cycles, giving him a front row seat to the evolution of the alternatives industry. Our conversation covers Jeff's path from law school to distressed investing, lessons learned under mentors John Angelo and Michael Gordon, and the founding of Centerbridge with Mark Gallogly to bridge the world of private equity and credit. We discussed the firm's distinctive model of investing on both sides of the balance sheet and sector teams, building culture and compensation systems to reinforce collaboration, and adapting strategy through changing credit environments. Jeff also shares his perspectives on late cycle market behavior, the shifting dynamics of private credit, partnerships with insurers and banks, and the challenge of staying differentiated as alternatives become mainstream. I hope you enjoy the show. And if you do, this week, why not reach out to your parents? If they're anything like my folks, they probably aren't that technologically inclined and might need to learn how to use the podcast app on their phone. Reach out to them, send your love, and show them how to use the app, and then tell them you might want to listen to Capital Allocators. Thanks so much for spreading the word. Please enjoy my conversation with Jeff Aronson. Jeff, excited to do this with you.

**Jeff Aronson** (2:00)
Me too.

**Ted Seides** (2:01)
Why don't you take me back to your upbringing?

**Jeff Aronson** (2:03)
I was raised in suburban Boston, a town called Needham, Mass. My mom and dad were from Springfield, Mass, Western Massachusetts. That's why I don't have a Boston accent. My dad was an educator. He was a teacher. He was a coach. My dad taught gym, physical education at junior high school in Needham. I remember when I was eight, we moved to Washington State, and my father had a job there for a year. Literally a town in the middle of nowhere. They were known for their rodeo. That was about it. Then we moved back a year later, and my dad worked at Needham High School. Then he eventually got a job, again, in physical education at Lowell Tech, which became University of Mass at Lowell. We were a very middle-class family. We never had a lot, but we always had enough. A brother who's five years younger than me, he also lives here in New York City. Very ordinary upbringing with the split level house and all that stuff.

**Ted Seides** (3:10)
Were there any lessons you remember from your dad as a coach that he imparted on you guys as kids?

**Jeff Aronson** (3:16)
He never pushed me nor my brother for that matter into athletics. He was highly, highly conscious of not doing that. My father had been a great athlete all his life. He was a boxer, he was a gymnast at the highest competitive level. He probably realized his sons didn't get that gene, but to his credit, he never pushed us. It's a lesson, but you don't push people beyond their capabilities, put someone in a position where they can't succeed. I suspect he thought, I would love for my son to be a Division I athlete. It wasn't going to happen.

**Ted Seides** (3:53)
Since you went through school, you got on the law track. What were your thoughts of your capabilities at the time?

**Jeff Aronson** (4:01)
I went to college at Johns Hopkins. I was always interested in government and public policy. I liked the fact Baltimore was close to Washington, so I thought that was cool. I knew nothing about being a lawyer. I thought if I was interested in government and policy, law school made sense. I got into a bunch of law schools. I got a big scholarship at NYU, so I said, that sounds good. Law school was enjoyable. I made a lot of great friends there. I said it was another three years of college. I learned what it was like to understand the law, but I had no idea what it was like to practice law. I found myself at a job at a big law firm. This is in 1984, and it was like, oh, wasn't what I thought. I had this vision, I was going to practice international law. I thought I would fly to London and I would negotiate a deal and stay in a beautiful hotel. I learned international law meant staying up all night in an office building downtown, pouring through a stack of documents looking for typos. This was not for me.