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CONSOLIDATION (Tables)

3 Months Ended

Mar. 31, 2023

Condensed Financial Information Disclosure [Abstract]

The Company’s interests in consolidated and non-consolidated VIEs, as presented within the Condensed Consolidated Statements of Financial Condition, its respective maximum exposure to loss relating to non-consolidated VIEs, and its net income attributable to non-controlling interests related to consolidated VIEs, as presented within the Condensed Consolidated Statements of Operations, are as follows:


	As of March 31,		As of December 31,

	2023		2022
Maximum exposure to loss attributable to the Company’s investment in non-consolidated VIEs(1)	$	370,402	$	393,549
Maximum exposure to loss attributable to the Company’s investment in consolidated VIEs(1)	552,278		537,239
Assets of consolidated VIEs	13,781,266		13,128,088
Liabilities of consolidated VIEs	12,108,023		11,593,867

(1)As of March 31, 2023 and December 31, 2022, the Company’s maximum exposure of loss for CLO securities was equal to the cumulative fair value of our capital interest in CLOs and totaled $81.0 million and $82.0 million, respectively.


	Three months ended March 31,
	2023		2022
Net income attributable to non-controlling interests related to consolidated VIEs	$	37,131	$	38,462

Schedule of Consolidating Effects of the Consolidated Funds on the Company's Financial Condition

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company’s financial condition, results from operations and cash flows:


	As of March 31, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	272,249	$	—	$	—	$	272,249
Investments (includes $3,236,418 of accrued carried interest)	4,666,602		—		(565,919)		4,100,683
Due from affiliates	1,035,397		—		(327,593)		707,804
Other assets	267,068		—		—		267,068
Right-of-use operating lease assets	154,970		—		—		154,970
Intangible assets, net	1,166,607		—		—		1,166,607
Goodwill	998,937		—		—		998,937
Assets of Consolidated Funds
Cash and cash equivalents	—		754,934		—		754,934
Investments held in trust account	—		484,901		—		484,901
Investments, at fair value	—		12,636,458		4,793		12,641,251
Due from affiliates	—		21,711		(10,833)		10,878
Receivable for securities sold	—		305,418		—		305,418
Other assets	—		62,882		—		62,882
Total assets	$	8,561,830	$	14,266,304	$	(899,552)	$	21,928,582
Liabilities
Accounts payable, accrued expenses and other liabilities	$	272,131	$	—	$	(10,833)	$	261,298
Accrued compensation	214,135		—		—		214,135
Due to affiliates	183,451		—		—		183,451
Performance related compensation payable	2,365,230		—		—		2,365,230
Debt obligations	2,369,292		—		—		2,369,292

Operating lease liabilities	191,090		—		—		191,090
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		200,998		(13,493)		187,505
Due to affiliates	—		322,800		(322,800)		—
Payable for securities purchased	—		549,415		—		549,415
CLO loan obligations, at fair value	—		11,013,602		(95,595)		10,918,007
Fund borrowings	—		103,046		—		103,046
Total liabilities	5,595,329		12,189,861		(442,721)		17,342,469
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		484,801		—		484,801
Redeemable interest in Ares Operating Group entities	21,942		—		—		21,942
Non-controlling interest in Consolidated Funds	—		1,591,642		(420,240)		1,171,402
Non-controlling interest in Ares Operating Group entities	1,252,700		—		(14,626)		1,238,074
Stockholders’ Equity

Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (177,674,055 shares issued and outstanding)	1,777		—		—		1,777
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (120,638,398 shares issued and outstanding)	1,206		—		—		1,206
Additional paid-in-capital	2,122,008		—		(21,965)		2,100,043
Accumulated deficit	(420,822)		—		—		(420,822)
Accumulated other comprehensive loss, net of tax	(12,345)		—		—		(12,345)
Total stockholders’ equity	1,691,859		—		(21,965)		1,669,894
Total equity	2,944,559		1,591,642		(456,831)		4,079,370
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,561,830	$	14,266,304	$	(899,552)	$	21,928,582


	As of December 31, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	389,987	$	—	$	—	$	389,987
Investments (includes $3,106,577 of accrued carried interest)	4,515,955		—		(541,221)		3,974,734
Due from affiliates	949,532		—		(191,060)		758,472
Other assets	381,137		—		—		381,137
Right-of-use operating lease assets	155,950		—		—		155,950
Intangible assets, net	1,208,220		—		—		1,208,220
Goodwill	999,656		—		—		999,656
Assets of Consolidated Funds
Cash and cash equivalents	—		724,641		—		724,641
Investments held in trust account	—		1,013,382		—		1,013,382
Investments, at fair value	—		12,187,392		3,859		12,191,251
Due from affiliates	—		26,531		(10,742)		15,789
Receivable for securities sold	—		124,050		—		124,050
Other assets	—		65,570		—		65,570
Total assets	$	8,600,437	$	14,141,566	$	(739,164)	$	22,002,839
Liabilities
Accounts payable, accrued expenses and other liabilities	$	242,663	$	—	$	(10,742)	$	231,921
Accrued compensation	510,130		—		—		510,130
Due to affiliates	252,798		—		—		252,798
Performance related compensation payable	2,282,209		—		—		2,282,209
Debt obligations	2,273,854		—		—		2,273,854
Operating lease liabilities	190,616		—		—		190,616
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		175,435		(7,149)		168,286
Due to affiliates	—		191,238		(187,201)		4,037
Payable for securities purchased	—		314,193		—		314,193
CLO loan obligations, at fair value	—		10,797,332		(95,612)		10,701,720
Fund borrowings	—		168,046		—		168,046
Total liabilities	5,752,270		11,646,244		(300,704)		17,097,810
Commitments and contingencies
Redeemable interest in Consolidated Funds	—		1,013,282		—		1,013,282
Redeemable interest in Ares Operating Group entities	93,129		—		—		93,129
Non-controlling interest in Consolidated Funds	—		1,482,040		(407,684)		1,074,356
Non-controlling interest in Ares Operating Group entities	1,147,269		—		(12,246)		1,135,023
Stockholders’ Equity

Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (173,892,036 shares issued and outstanding)	1,739		—		—		1,739
Non-voting common stock, $0.01 par value, 500,000,000 shares authorized (3,489,911 shares issued and outstanding)	35		—		—		35
Class B common stock, $0.01 par value, 1,000 shares authorized ($1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (117,231,288 shares issued and outstanding)	1,172		—		—		1,172
Additional paid-in-capital	1,989,284		—		(18,530)		1,970,754
Accumulated deficit	(369,475)		—		—		(369,475)
Accumulated other comprehensive loss, net of tax	(14,986)		—		—		(14,986)
Total stockholders’ equity	1,607,769		—		(18,530)		1,589,239
Total equity	2,755,038		1,482,040		(438,460)		3,798,618
Total liabilities, redeemable interest, non-controlling interests and equity	$	8,600,437	$	14,141,566	$	(739,164)	$	22,002,839

Schedule of Results from Operations


	Three months ended March 31, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	612,117	$	—	$	(11,601)	$	600,516
Carried interest allocation	154,895		—		(3,407)		151,488
Incentive fees	9,061		—		(138)		8,923
Principal investment income	35,457		—		(12,699)		22,758
Administrative, transaction and other fees	34,520		—		(4,843)		29,677
Total revenues	846,050		—		(32,688)		813,362
Expenses
Compensation and benefits	360,781		—		—		360,781
Performance related compensation	111,658		—		—		111,658
General, administrative and other expense	148,688		—		(343)		148,345
Expenses of the Consolidated Funds	—		19,641		(11,789)		7,852
Total expenses	621,127		19,641		(12,132)		628,636
Other income (expense)
Net realized and unrealized gains on investments	7,852		—		(6,337)		1,515
Interest and dividend income	7,176		—		(3,337)		3,839
Interest expense	(24,986)		—		—		(24,986)
Other expense, net	(1,014)		—		91		(923)
Net realized and unrealized gains (losses) on investments of the Consolidated Funds	—		(2,069)		12,769		10,700
Interest and other income of the Consolidated Funds	—		223,029		(91)		222,938
Interest expense of the Consolidated Funds	—		(158,043)		1,356		(156,687)
Total other income (expense), net	(10,972)		62,917		4,451		56,396
Income before taxes	213,951		43,276		(16,105)		241,122
Income tax expense	33,328		478		—		33,806
Net income	180,623		42,798		(16,105)		207,316
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		42,798		(16,105)		26,693
Net income attributable to Ares Operating Group entities	180,623		—		—		180,623
Less: Net loss attributable to redeemable interest in Ares Operating Group entities	(1,824)		—		—		(1,824)
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	88,408		—		—		88,408



Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	94,039	$	—	$	—	$	94,039


	Three months ended March 31, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees	$	488,811	$	—	$	(11,479)	$	477,332
Carried interest allocation	178,289		—		—		178,289
Incentive fees	16,456		—		(34)		16,422
Principal investment income	14,490		—		(6,164)		8,326
Administrative, transaction and other fees	39,399		—		(4,769)		34,630
Total revenues	737,445		—		(22,446)		714,999
Expenses
Compensation and benefits	357,243		—		—		357,243
Performance related compensation	129,405		—		—		129,405
General, administrative and other expense	120,523		—		—		120,523
Expenses of the Consolidated Funds	—		16,077		(11,564)		4,513
Total expenses	607,171		16,077		(11,564)		611,684
Other income (expense)
Net realized and unrealized gains (losses) on investments	(4,926)		—		13,035		8,109
Interest and dividend income	3,410		—		(1,908)		1,502
Interest expense	(15,646)		—		—		(15,646)
Other income, net	790		—		994		1,784
Net realized and unrealized gains on investments of the Consolidated Funds	—		23,011		(7,043)		15,968
Interest and other income of the Consolidated Funds	—		121,284		(994)		120,290
Interest expense of the Consolidated Funds	—		(77,447)		3,434		(74,013)
Total other income (expense), net	(16,372)		66,848		7,518		57,994
Income before taxes	113,902		50,771		(3,364)		161,309
Income tax expense	20,386		25		—		20,411
Net income	93,516		50,746		(3,364)		140,898
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		50,746		(3,364)		47,382
Net income attributable to Ares Operating Group entities	93,516		—		—		93,516
Less: Net income attributable to redeemable interest in Ares Operating Group entities	399		—		—		399
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	47,254		—		—		47,254



Net income attributable to Ares Management Corporation Class A and non-voting common stockholders	$	45,863	$	—	$	—	$	45,863

Schedule of Cash Flows


	Three months ended March 31, 2023
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	180,623	$	42,798	$	(16,105)	$	207,316
Adjustments to reconcile net income to net cash provided by operating activities	100,469		—		21,292		121,761








Adjustments to reconcile net income to net cash provided by operating activities allocable to non-controlling interests in Consolidated Funds	—		341,609		(12,769)		328,840





Cash flows due to changes in operating assets and liabilities	(132,777)		—		139,848		7,071





Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds	—		202,877		(160,293)		42,584




Net cash provided by operating activities	148,315		587,284		(28,027)		707,572
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(8,877)		—		—		(8,877)
Acquisitions, net of cash acquired	—		—		—		—
Net cash used in investing activities	(8,877)		—		—		(8,877)
Cash flows from financing activities:

Proceeds from Credit Facility	245,000		—		—		245,000

Repayments of Credit Facility	(150,000)		—		—		(150,000)

Dividends and distributions	(251,632)		—		—		(251,632)



Stock option exercises	9,180		—		—		9,180
Taxes paid related to net share settlement of equity awards	(113,431)		—		—		(113,431)
Other financing activities	483		—		—		483
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	—		103,808		(10,223)		93,585
Distributions to non-controlling interests in Consolidated Funds	—		(28,890)		7,957		(20,933)
Redemptions of redeemable interests in Consolidated Funds	—		(538,985)		—		(538,985)
Borrowings under loan obligations by Consolidated Funds	—		2,914		—		2,914
Repayments under loan obligations by Consolidated Funds	—		(97,325)		—		(97,325)
Net cash used in financing activities	(260,400)		(558,478)		(2,266)		(821,144)
Effect of exchange rate changes	3,224		1,487		—		4,711
Net change in cash and cash equivalents	(117,738)		30,293		(30,293)		(117,738)
Cash and cash equivalents, beginning of period	389,987		724,641		(724,641)		389,987
Cash and cash equivalents, end of period	$	272,249	$	754,934	$	(754,934)	$	272,249
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisition-related activity	$	115,364	$	—	$	—	$	115,364
Issuance of AOG Units in connection with settlement of management incentive program	$	245,647	$	—	$	—	$	245,647


	Three months ended March 31, 2022
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	93,516	$	50,746	$	(3,364)	$	140,898
Adjustments to reconcile net income to net cash provided by operating activities	43,970		—		9,503		53,473







Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(104,815)		7,043		(97,772)





Cash flows due to changes in operating assets and liabilities	125,246		—		7,100		132,346





Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds	—		(568,394)		563,599		(4,795)




Net cash provided by (used in) operating activities	262,732		(622,463)		583,881		224,150
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net of disposals	(8,524)		—		—		(8,524)
Acquisitions, net of cash acquired	(301,624)		—		—		(301,624)
Net cash used in investing activities	(310,148)		—		—		(310,148)
Cash flows from financing activities:

Proceeds from Credit Facility	860,000		—		—		860,000
Proceeds from senior notes	488,915		—		—		488,915

Repayments of Credit Facility	(905,000)		—		—		(905,000)
Dividends and distributions	(211,886)		—		—		(211,886)


Stock option exercises	3,347		—		—		3,347
Taxes paid related to net share settlement of equity awards	(183,027)		—		—		(183,027)
Other financing activities	856		—		—		856
Allocable to redeemable and non-controlling interests in Consolidated Funds:
Contributions from redeemable and non-controlling interests in Consolidated Funds	—		104,803		(21,873)		82,930
Distributions to non-controlling interests in Consolidated Funds	—		(38,931)		3,973		(34,958)

Borrowings under loan obligations by Consolidated Funds	—		49,317		—		49,317
Repayments under loan obligations by Consolidated Funds	—		(57,457)		—		(57,457)
Net cash provided by financing activities	53,205		57,732		(17,900)		93,037
Effect of exchange rate changes	(3,402)		(1,250)		—		(4,652)
Net change in cash and cash equivalents	2,387		(565,981)		565,981		2,387
Cash and cash equivalents, beginning of period	343,655		1,049,191		(1,049,191)		343,655
Cash and cash equivalents, end of period	$	346,042	$	483,210	$	(483,210)	$	346,042
Supplemental disclosure of non-cash financing activities:
Issuance of Class A common stock in connection with acquisition-related activity	$	12,835	$	—	$	—	$	—

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details