A merger is reportedly brewing between two of Los Angeles’ biggest private markets players.
Century City-based Ares Management Corp. is in talks to acquire Westwood’s $85-billion private equity firm Leonard Green & Partners, Financial Times reported.
The deal would quadruple the size of Ares’ private equity business and transform it from a private credit specialist into a diversified alternative asset manager. At $25 billion, the firm’s private equity fund currently represents less than 4% of its total $664 billion assets under management and trails behind competitors like Apollo Global Management, Blackstone Inc. and Kohlberg Kravis Roberts & Co.
News of the rumored acquisition discussion came after Ares Chief Executive Michael Arougheti shared in a December interview with the FT that he was interested in buying a private equity group to sharpen the firm’s edge over rivals. A rule change that opens U.S. retirement plans up to alternative investments is a key impetus to the firm’s growth plans, Arougheti told the FT.
“I could see a world where we look to expand the private equity franchise, either by getting larger, geographically diversifying, looking at sector-specific capabilities that would be additive to other parts of the franchise,” he said at the time.
Where better to look than down Santa Monica Boulevard at the offices of Leonard Green, one of the oldest and largest buyout shops in the world.
Founded in 1989, the firm’s headline acquisitions include Topgolf, Shake Shack, the Container Store and the now-defunct Jo-Ann Stores. Its $18.3 billion sale of roofing supplier SRS Distribution to Home Depot in 2024 was one of the largest private equity exits of a U.S.-based company in history.
Private equity consolidation picks up
Ares’ move to bolster its private equity portfolio falls in with supercharged consolidation among general partners amid rising regulatory pressures and heated competition. PitchBook reported a record 296 acquisitions of private capital firms last year, up 17% from 2024.
Firms have merged at an even faster clip in 2026, with the year’s first seven months seeing 182 deals totalling $33 billion.
The trend accompanies a widening spread between top-performing and under-performing firms’ rates of return and fundraising.
Limited partners are increasingly directing capital into fewer and proven hands. Private Equity International’s 2025 year-end ranking estimated that 10 firms were responsible for a quarter of the total raised by the top 300. The growing backlog of companies sitting in private equity portfolios without a viable exit is a key stressor, hitting middle-market and big-name firms alike.
