Compass Diversified takes majority stake in Lugano Diamonds & Jewelry

Compass Diversified acquired approximately 60% of Lugano Diamonds & Jewelry on 3 September 2021, at an enterprise value of $300–700M representing an EV/EBITDA multiple of 8.5x on the twelve months to June 2021. It paid around 198 million dollars in cash, funded from its balance sheet and its revolving facility, after certain sellers rolled shares into the acquisition vehicle. Co-founder Moti Ferder retained a significant holding with his family and continued as chief executive. The acquirer simultaneously extended a credit facility to the company, with approximately 102 million dollars drawn at closing. Founded in 2004 and based at Newport Beach, Lugano Diamonds & Jewelry designs, manufactures and retails high-end jewellery produced as unique pieces rather than in series. Its four salons at Newport Beach, Aspen, Palm Beach and Ocala operated by private appointment, and it hosted or sponsored more than a hundred equestrian, charitable and social events each year through which it reached its clientele. EBITDA amounted to $25–50M over the twelve months to June 2021, against maintenance capital expenditure below one million dollars. Inventory rather than fixed assets absorbs the capital in this business, since each piece requires a stone bought before it is sold and held until a client appears, which is what made a lender-shareholder structure attractive to both parties and what later concealed the condition of the company. The business expanded to nine boutiques by 2025 and launched a private members’ club adjacent to the Newport Beach salon, while the credit facility was amended twenty-three times, raising total commitments beyond 760 million dollars. Those advances were later found to rest on misstated accounts. The acquirer disclosed an internal investigation into the financing, accounting and inventory practices of the business in May 2025 and the founder resigned from all positions; the company subsequently sued him alleging fraud, forged invoices, shipments of empty boxes and liabilities disguised as sales. Revenue and operating income reported for 2024 were materially overstated, and the company filed for Chapter 11 protection on 16 November 2025 owing approximately 681 million dollars to its majority shareholder. Gibson, Dunn & Crutcher advised Compass Diversified, while Holland & Knight advised Lugano Diamonds & Jewelry.