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The Thesis
Blackstone bought Hilton Hotels for $26 billion at what seemed like the worst possible timing — right before the financial crisis — but their operational improvements and patience turned it into the most profitable private equity deal in history.
The Story
In July 2007, Steve Schwarzman's Blackstone Group acquired Hilton Hotels for $26 billion in the largest hotel deal ever. The timing appeared catastrophic — the financial crisis hit months later, and the hotel industry was devastated. Hilton's earnings cratered, and the deal was widely viewed as a textbook case of buying at the top. Critics piled on, calling it the worst-timed LBO in history.
But Schwarzman and his team didn't panic. They restructured Hilton's operations, expanded internationally, launched new brands, and grew the room count significantly. When Blackstone took Hilton public again in 2013 and gradually sold down its stake over the following years, the total return was approximately $14 billion in profit — making it the single most profitable private equity deal in history. The Hilton investment proved that operational excellence and patience can overcome even terrible timing, and that the best private equity firms create value through genuine improvement, not just financial engineering.
Key Insight
Entry price matters less than operational execution and patience — a great operator can turn a badly-timed deal into the best deal ever.
“I always try to find the hardest thing to do, because there's less competition.”
Steve Schwarzman
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See how Glen Bradford applies these principles to his own investing. Long Fannie Mae & Freddie Mac junior preferred — conviction meets patience.