Ares Management has reportedly held discussions regarding a potential acquisition of Leonard Green & Partners, a move that would significantly expand Ares' private equity operations. Sources familiar with the matter indicate that while talks have occurred, a deal is not guaranteed. Such an acquisition would bolster Ares' corporate private equity business, where it currently trails competitors like Blackstone and KKR. Ares manages $644 billion in total assets, with $25 billion allocated to private equity. Leonard Green, managing approximately $85 billion, is a well-established private equity firm known for successful exits, including an $18 billion sale to Home Depot.

This potential merger aligns with a broader trend of consolidation in the private markets, driven by large asset managers seeking to diversify and grow fee-based revenues. The deal would also provide Ares with a stronger position in traditional private equity amid industry challenges such as slowing fundraising and a backlog of unsold deals. Leonard Green's strategy of investing in companies with stable earnings, like distributors and franchisees, is seen as a good fit for retail-oriented investment strategies. The firm is also recognized for its profitability and lean operational structure.

The proposed transaction would accelerate Ares' strategy of diversifying beyond its core credit business, a goal previously articulated by CEO Michael Arougheti. Both firms have roots tracing back to the 1980s leveraged finance boom. Ares was co-founded by Antony Ressler, an early investor in Apollo Global, while Leonard Green evolved from Gibbons Green, founded by Drexel alumni Jonathan Sokoloff and John Danhakl. Ares has a history of growth through acquisitions, expanding into areas like real estate and second-hand fund stakes.