Ares Management Corp
For the period ended Dec 31, 2025. Filed Feb 25, 2026.
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FY2025 · Filed Feb 25, 2026
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Item 8. Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Ares Management Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Ares Management Corporation (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of underlying investments of equity method investments
| Description of the Matter | At December 31, 2025, the carrying value of the Company’s investments totaled $5,508.4 million, primarily consisting of equity method - carried interest of $3,972.7 million, equity method private investment partnership interests - principal of $526.4 million and equity method private investment partnership interests and other (held at fair value) of $675.8 million. Management applies valuation techniques using significant unobservable inputs to arrive at the fair value of the underlying investments held by the equity method private investment partnership (“underlying investments”). The fair value of the underlying investments, as estimated by management, impacts the Company’s equity method - carried interest and equity method private investment partnership interests - principal. The valuation techniques applied and the significant unobservable inputs are discussed in Note 2. Summary of Significant Accounting Policies to the consolidated financial statements. Auditing the fair value of the underlying investments that are valued using significant unobservable inputs is complex and involves a high degree of auditor subjectivity to address the higher estimation uncertainty. |
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| How We Addressed the Matterin Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s investment valuation process for the underlying investments. This included management’s review controls over the assessment of the valuation techniques and significant unobservable inputs used to estimate the fair value of the underlying investments and management’s review of the completeness and accuracy of the data used in these estimates. Our audit procedures included, among others, evaluating, on a sample basis, the valuation techniques and significant unobservable inputs used by the Company in valuing the underlying investments and testing, on a sample basis, the mathematical accuracy of the related valuation models.For example, for a sample of underlying investments that were valued using the market approach, we performed procedures to evaluate the appropriateness of significant unobservable inputs such as the selected earnings before interest, taxes, depreciation and amortization multiples or revenue multiples that were derived from comparable companies. These procedures included assessing the appropriateness of management’s determination of the comparable companies, and, where applicable, comparing the selected multiples to market observed transactions of such companies. For a sample of underlying investments that were valued using the discounted cash flow valuation technique, we performed procedures to evaluate the appropriateness of significant unobservable inputs such as the selected discount rates and projections of future cash flows. These procedures included comparing the selected discount rates to market data and/or recalculating these discount rates, such as the underlying investment’s weighted average cost of capital. In addition, these procedures included comparing future projections to the current performance and the historical growth rates of the investees as well as to the growth rates of publicly traded comparable companies.In some instances, with the involvement of our valuation specialists, we independently developed fair value estimates using market information and compared our estimates to the fair value of the underlying investments. We searched for and evaluated information that corroborated or contradicted the significant unobservable inputs. We also evaluated subsequent events and transactions and considered whether they corroborated or contradicted the year-end valuations. |
Accounting for the acquisition of GCP International
| Description of the Matter | As disclosed in Note 3 of the consolidated financial statements, the Company acquired the international business of GLP Capital Partners Limited and certain of its affiliates, excluding its operations in Greater China (“GCP International”) in 2025 for total consideration of $3,916.5 million. The transaction was accounted for as a business combination. Identifiable intangible assets acquired through this business combination primarily consisted of indefinite-lived management contracts, finite-lived intangible assets-management contracts (collectively, “management contracts”) and finite-lived intangible assets-client relationships with acquisition-date fair values of $749.6 million, $473.3 million and $107.2 million, respectively.Auditing the Company’s accounting for its acquisition of GCP International was complex due to the significant estimation uncertainty in determining the fair value of management contracts. The significant estimation uncertainty was primarily due to the sensitivity of the fair value to underlying assumptions about future performance of the acquired business in the Company’s discounted cash flow model used to measure the management contracts. These significant assumptions included the revenue growth rates and future fundraising assumptions, which form the basis of the forecasted results, and the discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. |
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| How We Addressed the Matterin Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s acquisition process. This included management’s review controls over the fair valuation techniques and significant assumptions and inputs used to estimate the fair value of the management contracts, as well as management’s review of the completeness and accuracy of the data used in the management contracts valuation model.To test the fair value of the management contracts, our procedures included, among others, involving internal valuation specialists to assist in our evaluation of the Company’s valuation methodology and significant assumptions included in the fair value estimate, including testing the revenue growth rates and future fundraising assumptions that form the basis of the forecasted results, the discount rate, as well as testing the mathematical accuracy of the Company’s valuation model. For example, we performed sensitivity analyses for certain significant assumptions by comparing such assumptions to current industry, market, and/or economic trends; assumptions used to value similar intangible assets of other acquisitions; and the historical results of the acquired business. |
/s/Ernst & Young LLP
We have served as the Company’s auditor since 2011.
Los Angeles, California
February 25, 2026
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