Who Killed Dick Smith?

What a difference a couple of months can make. On Oct. 28, the chairman of Australian electronics chain Dick Smith was lauding the company's "strong and conservative balance sheet" at its annual shareholder meeting, and setting out plans to open more than 30 new stores. This morning, he announced that the company had run out of funds and was being put into administration.

What happened? Nothing that caught the eye of auditors at Deloitte, who signed off on the accounts last August without red flags, and raised no fresh issues when they were questioned at the October meeting. Christmas can be a challenging time for retailers, who take on debt to fill their warehouses in the hope of selling the inventory through the peak season, but getting that right is garden-variety stuff. If single-outlet convenience stores can survive December in one piece, you'd think an electronics chain with 393 outlets and 3,300 employees could manage it.

The finger of blame will naturally point at private equity. Sydney-based Anchorage Capital Partners bought the business from the country's largest grocery chain, Woolworths, for A$20 million ($14 million) in November 2012. Six months later, Anchorage paid a further A$74 million to release it from performance payments to Woolworths, and by the end of the year 80 percent of the company was sold back to the market in a deal valuing all of Dick Smith at A$520 million. Anchorage cleared out of its remaining stake last September, when the shares were trading on average marginally above the offer price. That 453 percent return seems pretty decent for two years of work.