Ares Management has held talks to acquire Leonard Green & Partners, one of the longest-established private equity firms in the United States, in a potential combination that would substantially enlarge Ares’ buyout business and deepen the consolidation reshaping the alternative asset management industry.

The discussions were reported by the Financial Times on July 27. People familiar with the matter said the firms had recently considered a potential tie-up but could still decide not to proceed. Neither Ares nor Leonard Green has announced a definitive agreement, disclosed a valuation or outlined how a transaction might be financed. The preliminary status of the talks means the ultimate structure, ownership arrangements and treatment of Leonard Green’s investment professionals remain unresolved.

Even without transaction terms, the difference in scale between the two firms’ private equity operations explains why the negotiations are strategically significant. Ares reported more than $644 billion in total assets under management as of March 31, 2026, spanning credit, real estate, infrastructure, secondaries and private equity. Its private equity platform accounts for approximately $25 billion of that total. Leonard Green reports about $85 billion under management, almost entirely associated with private equity and related investment strategies.

Combining the businesses could therefore produce a private equity operation with approximately $110 billion under management, before accounting for subsequent fundraising, distributions or differences in how the firms classify assets. That would represent more than four times Ares’ existing private equity scale and would move the company closer to the diversified business mix of larger rivals such as Blackstone, KKR and Apollo Global Management.

Ares has built its reputation primarily in private credit, where it has become one of the world’s most influential nonbank lenders. The company’s credit expertise, insurance relationships and ability to raise large pools of institutional capital have allowed it to benefit from the migration of lending activity away from traditional banks. However, that success has also left Ares more heavily identified with credit than several competing publicly traded alternative managers that operate substantial private equity, infrastructure, real estate and insurance businesses.

Leonard Green would address that imbalance with an established corporate buyout franchise rather than requiring Ares to build one fund by fund. Founded in 1989 and based in Los Angeles, Leonard Green says it has completed more than 160 investments. The firm concentrates on market-leading companies in consumer services, healthcare services, business services, distribution and industrial markets, often investing alongside founders and existing management teams.

That sector mix would add exposure to operating businesses that provide recurring or essential services to consumers and companies. Leonard Green’s portfolio history includes traditional leveraged buyouts, public-to-private transactions, recapitalizations, growth equity investments and selected public securities positions. Its current and former investments have included companies across retail, fitness, healthcare support, specialty distribution, software and outsourced corporate services.

One prominent example of Leonard Green’s investment record was SRS Distribution, the building-products distributor acquired by Home Depot in 2024 for an enterprise value of approximately $18.25 billion. Leonard Green and Berkshire Partners had backed the company as it expanded across roofing, landscaping and pool distribution. The exit demonstrated Leonard Green’s ability to build a large strategic asset in a fragmented industry and realize value through a sale to a major corporate buyer.

For Ares, the attraction would extend beyond the assets already managed by Leonard Green. Acquiring a mature private equity manager would provide future management fees from successor funds, potential performance income from existing portfolios and a new channel for deploying capital across Ares’ broader platform. Leonard Green portfolio companies could use Ares credit, infrastructure or real estate capabilities, while Ares’ global fundraising network could help distribute future Leonard Green products to a wider investor base.

The potential transaction would also support Ares’ efforts to reach individual investors. Alternative asset managers are expanding private-market products through wealth managers, private banks, registered investment advisers and retirement-related platforms. Private equity has historically been harder to package for individuals than private credit because investments can take longer to mature and generate less predictable cash flows. A larger and more diversified private equity portfolio could make it easier for Ares to design evergreen or limited-liquidity products with broader exposure across companies, funds and vintage years.

Leonard Green, in turn, could gain access to Ares’ public-company infrastructure, global distribution, technology systems and institutional relationships. Large private market managers increasingly need extensive compliance, reporting, product-development and investor-service capabilities. Those costs can be absorbed more efficiently across a platform managing hundreds of billions of dollars than by an independent firm concentrated in a single strategy.

The talks come as private equity managers face a more difficult operating environment than during the years of near-zero interest rates. Higher financing costs have complicated leveraged buyouts and reduced the prices buyers are willing to pay for portfolio companies. Many firms have held assets for longer than initially planned, while institutional investors have received fewer distributions from older funds. That has made some investors less willing or able to commit capital to new vehicles.

Fundraising has consequently become more concentrated among managers with recognizable brands, long track records and the ability to offer investors several strategies. Large institutions can reduce the number of external relationships they manage by allocating across credit, equity, infrastructure, real estate and secondaries through a smaller group of global firms. A combination with Leonard Green would make Ares more competitive for those consolidated mandates.

Scale can also strengthen a manager’s position when negotiating with banks, private lenders, consultants and portfolio company advisers. Larger platforms can support complex transactions, provide capital through several parts of the balance sheet and retain specialist operating teams. They can also invest more heavily in data, cybersecurity, regulatory compliance and fundraising resources, all of which have become more important as private markets expand.

Ares enters the discussions from a position of substantial fundraising momentum. The company reported record first-quarter fundraising of $30 billion, more than 45% above the year-earlier period. Total assets under management increased 18% from a year earlier, while fee-paying assets rose 19%. Management fees grew 25%, and Ares said it had nearly $160 billion of available capital at the end of the quarter.

Those figures suggest Ares has the distribution capacity and financial resources to support a major strategic transaction. They do not, however, determine whether Leonard Green’s owners would accept the valuation or governance terms available from a publicly traded buyer. Private equity firms are unusual acquisition targets because much of their value resides in investment performance, employee relationships and the ability of senior professionals to raise future funds.

Retention arrangements would therefore be central to any deal. Ares would need Leonard Green’s partners and investment teams to continue managing existing portfolios, maintaining relationships with limited partners and raising successor funds. Consideration could include cash, Ares shares, deferred payments and performance-linked compensation, although no details have been reported. Lockups and long-term incentive plans are commonly used to align acquired investment professionals with the buyer’s shareholders.

Culture would be another major issue. Leonard Green operates from a single Los Angeles office and emphasizes a focused, collaborative investment process with limited bureaucracy. Ares is also headquartered in Los Angeles but operates a global organization with thousands of employees and offices across the Americas, Europe, Asia-Pacific and the Middle East. Geographic proximity could simplify senior-level coordination, but integration into a much larger listed manager could alter decision-making, compensation and internal oversight.

The two firms already operate within overlapping parts of the private capital ecosystem. Ares can provide debt financing to private equity-backed companies, while Leonard Green sponsors leveraged acquisitions and recapitalizations. A combination would create opportunities to coordinate capital solutions, but it would also require policies governing conflicts of interest. Investors and regulators would expect clear procedures when an Ares-managed credit fund lends to a company owned by an Ares-managed private equity vehicle.

Fund investors would also scrutinize allocation rules. A broader platform could generate transactions suitable for multiple strategies, including private equity, direct lending, opportunistic credit, infrastructure and secondaries. Ares would need to demonstrate that investment opportunities are assigned fairly and that pricing between affiliated funds reflects market terms. Established alternative managers use committees, disclosure frameworks and independent valuation procedures to manage such conflicts, but the addition of a large buyout franchise would increase their complexity.

Regulatory review would depend on the final structure and size of the transaction. Ares is listed on the New York Stock Exchange and would need to make appropriate disclosures if negotiations produced a material agreement. The firms would also have to address investment adviser registrations, antitrust requirements, fund documentation and any limited-partner consent provisions triggered by changes in ownership or control.

The financing decision would shape the effect on Ares shareholders. An equity-heavy transaction could preserve cash and align Leonard Green’s partners with Ares’ long-term performance but dilute existing owners. A debt-funded acquisition could increase financial leverage at a time when borrowing costs remain elevated. Ares could also use a mixture of cash, shares and contingent consideration tied to future fundraising or investment performance.

Investors would focus closely on the acquired firm’s fee-related earnings, carried-interest potential and compensation burden. Private market managers are typically valued on recurring management fees, margins, fundraising durability and the expected value of performance income. Leonard Green’s established funds and profitable operating model could command a substantial price, but a buyer would need confidence that future fundraising remains strong after the ownership transition.

Ares would also have to manage the timing of any acquisition against conditions in the private equity market. A prolonged exit slowdown can delay performance fees and make portfolio valuations more uncertain. At the same time, difficult fundraising conditions can create opportunities for large firms to acquire respected independent managers that are considering succession, broader distribution or access to permanent capital.

Succession has become an increasingly important driver of asset-management transactions. Many private equity firms founded during the industry’s expansion in the 1980s and 1990s are transferring leadership to younger partners. Selling to a public alternative manager can provide liquidity to founders and senior owners while giving the next generation access to a larger balance sheet and global investor base. The challenge is preserving the acquired firm’s investment identity after the transaction.

A Leonard Green acquisition would be unusually consequential because it would add an entire private equity franchise at once rather than a smaller specialist capability. Ares has previously used acquisitions to expand in areas including real estate and other private-market strategies. Leonard Green would be a more direct move into large-scale corporate ownership and would materially change the composition of assets, revenues and performance-related earnings across the group.

The deal could also intensify competition for private equity assets. With a larger equity business, Ares would compete more frequently against the biggest global buyout managers for companies, executives and institutional commitments. It could also use its credit expertise to present sellers and management teams with flexible financing packages, potentially combining control equity with private debt and other structured capital.

For Leonard Green’s limited partners, the central questions would be continuity, independence and economics. Investors would want assurances that existing funds remain managed according to their original mandates and that the acquisition does not increase fees or weaken oversight. They would also evaluate whether Ares’ distribution power and complementary strategies improve access to deals or introduce organizational complexity that distracts from Leonard Green’s established approach.

The discussions remain at a stage where either side could walk away. Valuation disagreements, partner retention, governance, tax treatment or limited-partner concerns could prevent a transaction. The firms could also pursue a minority investment, strategic partnership or other arrangement instead of a full acquisition, although no alternative structure has been publicly confirmed.

If an agreement is reached, the transaction would rank as a major step in the evolution of Ares from a credit-centered manager into a more balanced alternatives group. It would also reinforce the industry’s shift toward a smaller number of large, multi-strategy firms capable of raising capital globally and distributing private-market products to both institutions and wealthy individuals.

Until definitive terms emerge, the principal confirmed development is that two major Los Angeles investment firms have considered combining. The outcome will depend on whether Ares can secure Leonard Green’s investment franchise without undermining the culture, personnel and investor relationships that make the business valuable. A completed acquisition would give Ares immediate private equity scale; a failed negotiation would still demonstrate how strongly the largest alternative managers are searching for established platforms in an increasingly concentrated market.