Compass Diversified Outlines Deleveraging Plan After 'Difficult' 2025

Company aims to reduce leverage, rebuild investor confidence, and 'reignite' acquisition strategy when conditions allow

Published on Feb. 28, 2026

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Compass Diversified (NYSE:CODI) executives emphasized a renewed focus on stabilizing operations, reducing leverage, and rebuilding investor confidence as they reviewed fiscal 2025 fourth-quarter results and outlined expectations for 2026. Chief Executive Officer Elias Sabo repeatedly described 2025 as a difficult year for the company, but argued that performance at the remaining subsidiaries demonstrated resilience after the issues surrounding Lugano.

Why it matters

Compass Diversified, a publicly traded private equity firm, is working to regain its footing after a challenging 2025 that included the bankruptcy of one of its subsidiaries, Lugano. The company's efforts to deleverage, divest assets, and refocus on its core operations are crucial for rebuilding investor confidence and positioning the firm for future growth through acquisitions.

The details

Management frames 2025 as a reset year, with Sabo describing it as 'painful' and 'humbling.' However, he noted that excluding Lugano, the company generated mid-single-digit revenue growth in 2025 and achieved operating leverage that contributed to high-single-digit growth in subsidiary adjusted EBITDA. Looking forward, CODI expects subsidiary adjusted EBITDA growth in the mid-single digits in 2026, supported by its 'diversified collection of businesses.' The company has initiated multiple sale processes to accelerate deleveraging, with Sabo characterizing buyer interest as 'really strong.' CODI reported full-year non-GAAP results that management said better reflect the business going forward, including 3.9% growth in net sales and 8.8% growth in subsidiary adjusted EBITDA, excluding Lugano.

  • Lugano entered Chapter 11 bankruptcy on November 16, 2025.
  • CODI completed its restatement work in early January 2026.

The players

Compass Diversified

A publicly traded private equity company headquartered in Bethesda, Maryland that specializes in acquiring and managing middle-market businesses across a variety of industries.

Elias Sabo

The Chief Executive Officer of Compass Diversified.

Stephen Keller

The Chief Financial Officer of Compass Diversified.

Lugano

A subsidiary of Compass Diversified that entered Chapter 11 bankruptcy in November 2025.

Altor

A subsidiary of Compass Diversified that saw acquisition-driven gains in 2025.

Arnold

A subsidiary of Compass Diversified that faced disruptions due to rare earth export restrictions from China.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.