COMMITMENTS AND CONTINGENCIES	6 Months Ended
Jun. 30, 2016
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	9. COMMITMENTS AND CONTINGENCIES Indemnification Arrangements Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and have not been recorded in the Condensed Consolidated Statements of Financial Condition. As of June 30, 2016, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote. Capital Commitments As of June 30, 2016 and December 31, 2015, the Company had aggregate unfunded commitments of $619.9 million and $436.4 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds. As of June 30, 2016, the Company had $37.6 million in unfunded commitments to invest in certain funds managed by Kayne Anderson Capital Advisors, L.P. ARCC and American Capital, Ltd. Merger Agreement On May 23, 2016, ARCC and American Capital, Ltd. (“ACAS”) entered into a definitive merger agreement pursuant to which ARCC will acquire ACAS in a cash and stock transaction valued at approximately $3.43 billion (the "ARCC-ACAS Transaction"). To support the ARCC-ACAS Transaction, the Company, through its subsidiary Ares Capital Management LLC, which serves as the investment adviser to ARCC, will (i) provide $275 million of cash consideration, in the form of $1.20 per share of ACAS common stock, payable to ACAS shareholders in accordance with the terms and conditions set forth in the merger agreement at the closing of the ARCC-ACAS Transaction and (ii) waive, for each of the first ten calendar quarters beginning with the first full calendar quarter after the closing of the ARCC-ACAS Transaction, the lesser of (x) $10 million of ARCC Part I Fees and (y) the amount of ARCC Part I Fees for such quarter, to the extent earned and payable by ARCC in such quarter (collectively, the "Transaction Support"). The Transaction Support is conditioned upon completion of the ARCC-ACAS Transaction. While there can be no assurances as to the exact timing, or that the ARCC-ACAS Transaction will be completed at all, the ARCC-ACAS Transaction is expected to be completed as early as the fourth quarter of 2016. The completion of the ARCC-ACAS Transaction is subject to certain conditions, including, among others, ACAS and ARCC shareholder approvals, required regulatory approvals, receipt of certain third party consents and other customary closing conditions. Guarantees On July 30, 2014, AM LLC agreed to provide credit support to a $75.0 million credit facility, (the “Guaranteed Facility”) entered into by a wholly owned subsidiary of Ares Commercial Real Estate Corporation (NYSE: ACRE) with a national banking association. AM LLC is the parent entity to ACRE’s external manager. In connection with the facility, AM LLC agreed to purchase all loans and other obligations outstanding under the Guaranteed Facility at a price equal to 100% of the outstanding balance (i) upon an acceleration or certain events of default by ACRE under the Guaranteed Facility or (ii) in the event that AM LLC’s corporate credit rating is downgraded to below investment grade, among other things. ACRE pays AM LLC a credit support fee of 1.50% per annum times the average amount of the loans outstanding under the Guaranteed Facility, payable monthly, and reimburses AM LLC for its out‑of‑pocket costs and expenses in connection with the Guaranteed Facility. The Company’s maximum exposure to loss shall not exceed $75.0 million plus accrued interest. The fair value of this guarantee recorded as of June 30, 2016 and December 31, 2015 was $1.7 million, and is included within accounts payable, accrued expenses and other liabilities in the Condensed Consolidated Statements of Financial Condition. There was no outstanding balance under the Guaranteed Facility as of June 30, 2016. The total outstanding balance under the Guaranteed Facility was $66.2 million as of December 31, 2015. This guarantee was extended and is currently scheduled to expire on September 30, 2016. The Company believes the likelihood of default by the subsidiary of ACRE to be remote. In connection with the acquisition of Energy Investors Funds (“EIF”), contingent consideration is payable to EIF’s former membership interest holders if certain funds and co-investment vehicles meet certain revenue and fee paying commitment targets. The fair value of the liability for contingent consideration is subject to change until the liability is settled with the related impact recorded to our Condensed Consolidated Statements of Operations within other income (expense), net. As of June 30, 2016 and December 31, 2015, the estimated fair value of the contingent consideration liability was $38.2 million and $38.1 million, respectively. Performance Fees Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest. At June 30, 2016 and December 31, 2015, if the Company assumed all existing investments were worthless, the amount of performance fees subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $356.5 million and $322.2 million, respectively, of which approximately $275.3 million and $247.9 million, respectively, is reimbursable to the Company by certain professionals. Management believes the possibility of all of the investments becoming worthless is remote. As of December 31, 2015, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of that date. Based on fair values of certain funds as of June 30, 2016, the Company has recorded a liability within due to affiliates associated with the contingent repayment obligation of $5.7 million, of which $3.4 million is recoverable from the Company’s senior professionals and other professionals who previously received performance fees, and as such has been recorded within due from affiliates on the Company’s Condensed Consolidated Statements of Financial Condition. Litigation From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.

9. COMMITMENTS AND CONTINGENCIES

Indemnification Arrangements

Consistent with standard business practices in the normal course of business, the Company enters into contracts that contain indemnities for affiliates of the Company, persons acting on behalf of the Company or such affiliates and third parties. The terms of the indemnities vary from contract to contract and the Company’s maximum exposure under these arrangements cannot be determined and have not been recorded in the Condensed Consolidated Statements of Financial Condition. As of June 30, 2016, the Company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

Capital Commitments

As of June 30, 2016 and December 31, 2015, the Company had aggregate unfunded commitments of $619.9 million and $436.4 million, respectively, including commitments to both non-consolidated funds and Consolidated Funds.

As of June 30, 2016, the Company had $37.6 million in unfunded commitments to invest in certain funds managed by Kayne Anderson Capital Advisors, L.P.

ARCC and American Capital, Ltd. Merger Agreement

On May 23, 2016, ARCC and American Capital, Ltd. (“ACAS”) entered into a definitive merger agreement pursuant to which ARCC will acquire ACAS in a cash and stock transaction valued at approximately $3.43 billion (the "ARCC-ACAS Transaction"). To support the ARCC-ACAS Transaction, the Company, through its subsidiary Ares Capital Management LLC, which serves as the investment adviser to ARCC, will (i) provide $275 million of cash consideration, in the form of $1.20 per share of ACAS common stock, payable to ACAS shareholders in accordance with the terms and conditions set forth in the merger agreement at the closing of the ARCC-ACAS Transaction and (ii) waive, for each of the first ten calendar quarters beginning with the first full calendar quarter after the closing of the ARCC-ACAS Transaction, the lesser of (x) $10 million of ARCC Part I Fees and (y) the amount of ARCC Part I Fees for such quarter, to the extent earned and payable by ARCC in such quarter (collectively, the "Transaction Support").

The Transaction Support is conditioned upon completion of the ARCC-ACAS Transaction. While there can be no assurances as to the exact timing, or that the ARCC-ACAS Transaction will be completed at all, the ARCC-ACAS Transaction is expected to be completed as early as the fourth quarter of 2016. The completion of the ARCC-ACAS Transaction is subject to certain conditions, including, among others, ACAS and ARCC shareholder approvals, required regulatory approvals, receipt of certain third party consents and other customary closing conditions.

Guarantees

On July 30, 2014, AM LLC agreed to provide credit support to a $75.0 million credit facility, (the “Guaranteed Facility”) entered into by a wholly owned subsidiary of Ares Commercial Real Estate Corporation (NYSE: ACRE) with a national banking association. AM LLC is the parent entity to ACRE’s external manager. In connection with the facility, AM LLC agreed to purchase all loans and other obligations outstanding under the Guaranteed Facility at a price equal to 100% of the outstanding balance (i) upon an acceleration or certain events of default by ACRE under the Guaranteed Facility or (ii) in the event that AM LLC’s corporate credit rating is downgraded to below investment grade, among other things. ACRE pays AM LLC a credit support fee of 1.50% per annum times the average amount of the loans outstanding under the Guaranteed Facility, payable monthly, and reimburses AM LLC for its out‑of‑pocket costs and expenses in connection with the Guaranteed Facility. The Company’s maximum exposure to loss shall not exceed $75.0 million plus accrued interest. The fair value of this guarantee recorded as of June 30, 2016 and December 31, 2015 was $1.7 million, and is included within accounts payable, accrued expenses and other liabilities in the Condensed Consolidated Statements of Financial Condition. There was no outstanding balance under the Guaranteed Facility as of June 30, 2016. The total outstanding balance under the Guaranteed Facility was $66.2 million as of December 31, 2015. This guarantee was extended and is currently scheduled to expire on September 30, 2016. The Company believes the likelihood of default by the subsidiary of ACRE to be remote.

In connection with the acquisition of Energy Investors Funds (“EIF”), contingent consideration is payable to EIF’s former membership interest holders if certain funds and co-investment vehicles meet certain revenue and fee paying commitment targets. The fair value of the liability for contingent consideration is subject to change until the liability is settled with the related impact recorded to our Condensed Consolidated Statements of Operations within other income (expense), net. As of June 30, 2016 and December 31, 2015, the estimated fair value of the contingent consideration liability was $38.2 million and $38.1 million, respectively.

Performance Fees

Generally, if at the termination of a fund (and increasingly at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the general partner receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Company will be obligated to repay carried interest that was received by the Company in excess of the amounts to which the Company is entitled. This contingent obligation is normally reduced by income taxes paid by the Company related to its carried interest.

At June 30, 2016 and December 31, 2015, if the Company assumed all existing investments were worthless, the amount of performance fees subject to potential repayment, net of tax, which may differ from the recognition of revenue, would have been approximately $356.5 million and $322.2 million, respectively, of which approximately $275.3 million and $247.9 million, respectively, is reimbursable to the Company by certain professionals. Management believes the possibility of all of the investments becoming worthless is remote. As of December 31, 2015, if the funds were liquidated at their fair values, there would be no repayment obligation, and accordingly, the Company did not record a contingent repayment liability as of that date. Based on fair values of certain funds as of June 30, 2016, the Company has recorded a liability within due to affiliates associated with the contingent repayment obligation of $5.7 million, of which $3.4 million is recoverable from the Company’s senior professionals and other professionals who previously received performance fees, and as such has been recorded within due from affiliates on the Company’s Condensed Consolidated Statements of Financial Condition.

Litigation

From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Although there can be no assurance of the outcome of such legal actions, in the opinion of management, the Company does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial condition or cash flows.