In an interview with GrowthBusiness, Moulton says that buy-outs funded by debt of up to eight times profits will come under pressure as the economy falters and credit tightens.

He explains: ‘As the market peaked last spring, the integrity [of deals] suffered. A lot of deals were done without what would have traditionally been called a proper accountant’s report.

‘You are going to see some companies failing because of misrepresentation, lack of proper due diligence.’

Moulton adds that large leveraged buy-out funds, the ‘mega boys who are used to playing £1 billion deals’ will struggle without the easy credit that has fuelled their success. He says: ‘The amount of debt available is clearly massively reduced, and the aggression [risk tolerance] of that debt is massively reduced. So deals are going to be very, very difficult to finance because they will need very large amounts of equity and very low rates of return will result.’

The man who helped to turn around Parker Pen has been worried about the problem of excessive leverage for some time. In a Guardian interview in January 2006, he argued that ‘the extreme over-leveraging of some companies will lead to a spectacular downturn at some point’.

However, his outlook isn’t entirely bleak. Venture capital, which invests in companies at an earlier stage and relies less on debt, ‘is having a bit of an upswing’, according to Moulton, and a faltering economy may create opportunities in ‘troubled companies’.