Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Ares Management Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -9.5% to 11.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 121, DPO 117, DIO 60). At a 7.5% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $179.09 per share, suggesting ARES is undervalued by 66.3% at the current price of $107.66.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 843 | 988 | 1,190 | 1,701 | 1,894 | 1,941 |
| (−) Net Interest | 978 | 1,146 | 1,380 | 1,973 | 2,197 | 2,251 |
| (+) D&A | 59 | 70 | 82 | 93 | 108 | 111 |
| EBITDA | 1,880 | 2,204 | 2,653 | 3,767 | 4,199 | 4,304 |
| (−) Tax | 117 | 137 | 165 | 236 | 262 | — |
| (−) CapEx | 84 | 98 | 118 | 169 | 188 | — |
| (−) ΔWC | -303 | 274 | 383 | 969 | 365 | — |
| Free Cash Flow (FCF) | 1,983 | 1,695 | 1,987 | 2,394 | 3,384 | — |
| Peers' EBITDA Multiple | 14.3x | |||||
| Terminal Value | 61,500 | |||||
| WACC / Discount Rate | 7.45% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,913 | 1,522 | 1,661 | 1,862 | 2,449 | 42,940 |
| Enterprise Value | 52,346 | |||||
| Projection Period | 9,406 | 18.0% | ||||
| Terminal Value | 42,940 | 82.0% | ||||
| (−) Current Net Debt | 13,412 | |||||
| Equity Value | 38,934 | |||||
| (÷) Outstanding Shares | 217M | |||||
| Fair Price | $179 | +66.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.3x | 12.3x | 14.3x | 16.3x | 18.3x |
|---|---|---|---|---|---|
| 5.4% | $140 | $170 | $201 | $231 | $262 |
| 6.4% | $132 | $161 | $190 | $219 | $248 |
| 7.4% | $124 | $151 | $179 | $207 | $234 |
| 8.4% | $116 | $143 | $169 | $196 | $222 |
| 9.4% | $109 | $134 | $160 | $185 | $210 |
Current price: $107.66. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.