Brookfield's $3B Acquisition of Oaktree's Remaining Stake: Strategic Move or Overpayment?

Brookfield Asset Management's impending $3 billion acquisition of the remaining 26% stake in Oaktree Capital Management represents a pivotal moment in the alternative asset management sector. This deal, expected to close in early 2026, will fully consolidate Oaktree under Brookfield's umbrella, valuing the distressed-debt specialist at $11.5 billion-a 75% increase in assets under management (AUM) since Brookfield's initial 2019 acquisition of a 61.2% stake for $4.8 billion according to Investing.com. While the transaction aligns with Brookfield's strategic push into credit markets and private assets, it also raises critical questions about valuation risks in an industry grappling with volatile earnings and shifting investor sentiment.

Strategic Rationale: Strengthening Credit and Alternative Assets

Brookfield's acquisition of Oaktree is a continuation of its broader strategy to dominate the alternative asset management space. Oaktree's expertise in distressed debt and private credit complements Brookfield's existing infrastructure and real-estate portfolios, creating a diversified platform to capitalize on market dislocations. For instance, in 2025, Brookfield raised $16 billion for a real-estate fund targeting distressed commercial properties, leveraging Oaktree's capabilities to acquire assets at 20–40% discounts to peak values according to Credaily. This synergy is particularly valuable as higher interest rates and economic uncertainty drive more companies into restructuring scenarios, expanding opportunities for distressed investors.

The deal also reflects a broader trend of private equity consolidation. In 2024, M&A activity in the asset management industry hit record levels, with firms merging to achieve scale and operational efficiency according to RSM. Brookfield's full acquisition of Oaktree eliminates governance complexities from dual ownership and positions the combined entity to compete with industry giants like BlackRock and Apollo Global. As one industry analyst noted, "This is about building a juggernaut in alternatives-a sector where Brookfield has long sought to rival traditional asset managers," as observed in a Yahoo Finance piece.

Valuation Risks: A High-Multiple Bet?

The $11.5 billion valuation of Oaktree, however, warrants scrutiny. Industry benchmarks for distressed debt firms in 2025 suggest an enterprise value (EV)/EBITDA multiple of 41.45 from NYU Stern data. To assess whether Brookfield is overpaying, we must estimate Oaktree's EBITDA. While Oaktree's 2025 EBITDA figures are not explicitly disclosed, its Q1 2025 earnings report provides clues-the firm reported a net income of $28.29 million, down sharply from $247.95 million in Q1 2024, due to restructuring charges and the absence of incentive income from deconsolidated funds according to StockInvest.us. Assuming a normalized EBITDA margin of 30–40% (typical for asset managers), Oaktree's annual EBITDA might range between $110 million and $150 million. Applying the 41.45 multiple would yield a valuation of $4.56 billion to $6.22 billion-far below the $11.5 billion Brookfield is paying.

This discrepancy suggests Brookfield is paying a premium driven by intangible assets such as Oaktree's brand, client relationships, and AUM growth potential. Since 2019, Oaktree's AUM has surged, and Brookfield's credit business-now a key growth driver-benefits from Oaktree's expertise in high-yield strategies. Yet, the premium also exposes Brookfield to risks if market conditions deteriorate. For example, that earnings report showed a 43.7% revenue decline year-over-year and a $4.92 million investment loss, highlighting operational vulnerabilities.

Broader Industry Context: A Tale of Two Markets

The alternative asset management sector itself is in flux. In Q3 2025, share prices for alternative managers fell 8% amid uncertainty over fiscal policy and monetary tightening according to Morningstar. At the same time, private credit and infrastructure funds have attracted inflows, with Brookfield raising $11 billion through Oaktree funds in 2023, as reported by Bloomberg. This duality underscores the challenge of valuing firms like Oaktree: while their core strategies remain attractive, their financial performance is increasingly tied to macroeconomic volatility.

Brookfield's acquisition also occurs against a backdrop of regulatory scrutiny. As private equity firms consolidate, regulators are intensifying oversight of fee structures and risk management. Overpaying for Oaktree could strain Brookfield's balance sheet, particularly if fundraising slows or AUM growth plateaus. The firm's broader capital-raising efforts in 2025-$26 billion across infrastructure and real estate-suggest confidence in its ability to deploy capital, but these successes are not guaranteed to extend to Oaktree's distressed-debt niche, as discussed on Brookfield's Substack.

Conclusion: A Calculated Gamble

Brookfield's $3 billion bet on Oaktree is a strategic move to solidify its position in alternatives, but it carries valuation risks. The acquisition's success will depend on Oaktree's ability to sustain AUM growth, navigate market volatility, and justify its premium valuation through performance. For investors, the key question is whether Brookfield's confidence in Oaktree's distressed-debt expertise will translate into long-term value creation-or whether the deal becomes a cautionary tale of overpayment in a consolidating industry.