Focus on pink elephants

After the binge, the hangover. The problems being experienced by Focus, a mid-sized UK home improvement or DIY retailer, illustrate the perils that may lie ahead for highly leveraged buyout companies and their investors. Focus’s story is a familiar one. The company refinanced itself through a leveraged recapitalisation 18 months ago when the credit spigots were wide open. This saddled it with £280m of net debt, equivalent to about six times its then ebitda. It also allowed the equity investors,...