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He built it into the dominant source of financing for companies shut out of investment-grade markets, then for corporate raiders such as Carl Icahn, T. Boone Pickens and Ronald Perelman. Drexel's annual Beverly Hills conference, nicknamed the Predators' Ball, brought issuers, raiders and bond buyers into one room, and Bruck presents it as the social engine that turned Milken's network into takeover capital.
Drexel let a raider launch a hostile bid backed only by a letter saying the firm was 'highly confident' it could raise the money, not by committed funds. The letter worked because Milken's record of placing huge bond issues within days made it credible. A reputation for guaranteed distribution became a substitute for cash in hand, which let small bidders threaten far larger targets.
Bruck argues that Milken's power came from controlling the buyer side of the market, not from underwriting skill alone. Savings and loans, insurers and funds that owed their growth to Drexel financing were expected to buy the next Drexel issue. Because issuers were often buyers of one another's bonds, demand and pricing were partly manufactured inside a reciprocal circle, and the network's loyalty mattered more than any single deal's merits.
Milken drew on academic research, including W. Braddock Hickman's study of corporate bonds, showing that diversified portfolios of below-investment-grade bonds earned returns that more than offset their defaults. The lesson he drew was that credit-rating stigma, not actual loss rates, set their price. This reframing let him market new-issue high-yield debt as a rational bargain, though evidence drawn from 'fallen angels' did not necessarily hold for bonds that started out as junk and were built to fund leveraged takeovers.