(Bloomberg) — Three months after Josh Harris made his failed pitch to take Leon Black’s crown atop a $455 billion investing juggernaut, Black’s chosen heir is in charge — and Harris is on the outs.The behind-the-scenes drama between Apollo Global Management Inc.’s billionaire co-founders keeps brewing, with ramifications for investors as the company reconfigures its governance this year. Publicly, Harris has endorsed the decision to elevate co-founder Marc Rowan to chief executive officer. Privately, he’s being sidelined, even as he remains a “key man” in Apollo’s flagship fund — meaning investments could stall without him.People close to the company, speaking on the condition they not be identified, said Harris has relinquished day-to-day handling of operations. He’s less involved in dealmaking than before, with underlings generally seeking his sign-off for only the largest transactions. Outside Apollo, he’s been shopping for a house in Florida to potentially serve as his primary residence, which would lower his tax bill if he starts to draw down the wealth he’s amassed at the company.Those amount to stark changes for Harris, 56, who for three decades has been known for working marathon hours and making his presence known throughout the New York-based private equity firm, running operations and pressing employees on the details of their deals. His decreased involvement has come with a sense of relief for some. When the topic arose recently, employees under Harris were heard humming their response: “Ding-Dong! The Witch is Dead” from “The Wizard of Oz.”Insiders privately predict Harris will formally take a more limited role, or even leave, in the coming year or so, devoting more time to outside business interests that include a stable of professional sports franchises.A spokesman for Harris declined to comment for this article, referring to a statement Harris issued in January, when Apollo announced plans to eventually make Rowan, 58, CEO. Harris said he would help expand the search for investor returns, develop the company’s platform and continue working with limited partners and investors.A representative for Apollo said there’s been no change to the roles and responsibilities outlined then.Nudging BlackMany of the private equity world’s most successful firms are in the midst of trying to pass power from founding CEOs to new teams, hoping not to alarm investors concerned about maintaining historic returns. It’s a process that’s proved fraught, as executives’ ambitions derail efforts to replicate the original chemistry. At Carlyle Group Inc., for example, an attempt to hand the reins to co-chiefs Kewsong Lee and Glenn Youngkin ended with Lee taking sole control last year and Youngkin gone — eventually running for governor of Virginia. Read more: Carlyle co-CEO’s abrupt exit caps a long, awkward power struggleBut at the famously bare-knuckled Apollo, the process was all the more rapid and tumultuous. Black, long synonymous with its public image, faced mounting scrutiny through 2020 over his private business dealings with Jeffrey Epstein, the notorious sex offender who killed himself in jail. In January, a board review found Black had paid $158 million to Epstein for services including tax advice and estate planning.Harris had spent years positioning himself, becoming a more public face of the company at conferences and in the media, setting the stage to potentially become CEO. As the review of Black wrapped up, Harris privately expressed concern about the reputational toll the Epstein news could take on Apollo and advocated that Black step down as CEO. But Black surprised insiders in January by persuading Rowan to accept the post, mere months after Rowan had announced he was going on “semi-sabbatical.”Rowan has since tightened his grip, taking over in March when Black, 69, sped up the handoff, citing health issues.Read more: Black picks his successor as Epstein links cost him CEO roleReducing Harris’ role is far from simple. He’s listed as a key man alongside Black and Rowan for the record-setting $24.7 billion fund raised in 2017. The loss of any two of them could potentially prevent the vehicle from making new investments until customers sign off. That status, insiders acknowledge, gives Harris leverage in deciding what role he continues to play at the company.But on other fronts he’s losing ground.Harris is still a member of the executive committee, to which the board has delegated certain authorities. In late January, Black announced plans to eliminate the panel. The company has said it will improve governance by reshaping the board — where Harris has a seat — so that two-thirds of its members are independent.While Harris still sits on meetings of the private equity investment committee and takes part in related discussions on strategy, dealmakers are involving him less when arranging transactions, according to the people. Since handing off control of the firm’s budget, his role in compensation decisions has diminished too, aside from weighing in on the most significant questions, the people said.In recent months, Apollo took the step of updating his executive biography on its website, deleting a significant line: Harris “today runs the day-to-day business of the firm.”House HuntingHarris graduated from the University of Pennsylvania’s Wharton School in 1986, two years behind Rowan. They soon ended up working as dealmakers at Drexel Burnham Lambert. When the junk-bond powerhouse collapsed in a scandal, Black brought the pair along to found Apollo with a few others in 1990.Over the decades, Harris played a hand in some of Apollo’s most successful bets. In 2008, he led a $2 billion investment in failing Dutch chemicals maker LyondellBasell Industries, on which Apollo eventually reaped a windfall as the company was restructured.The Bloomberg Billionaires Index estimates his wealth at $6.6 billion. Some of that is at Harris’s family office, HRS Management, which has pumped money into health clubs and a Spanish airline, and helped to manage Harris’s holdings in sports teams. Harris Blitzer Sports & Entertainment, set up with Blackstone Group Inc.’s David Blitzer, owns stakes in the Philadelphia 76ers, New Jersey Devils and English soccer club Crystal Palace.But the biggest part of his fortune is still tied up in Apollo’s stock and investments.Harris and his family, who live in New York, have been renting a home in South Florida since Covid-19 infections worsened in last year’s second half, according to people familiar with the matter. He’s been considering moving his primary residence there and viewing properties, the people said.Apollo also has been considering opening additional offices in Miami and West Palm Beach. But for Harris, establishing residency in a state with no income tax would save a lot of money if he were to start unwinding his financial ties to Apollo.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.