Jon Moulton, the founder of private equity group Alchemy Partners, says it’s time for entrepreneurs to ‘stop worrying about prosperity and to start thinking about survival’
Jon Moulton, the founder of private equity group Alchemy Partners, says it’s time for entrepreneurs to ‘stop worrying about prosperity and to start thinking about survival’.
The venture capitalist, who has invested in hundreds of companies over the years, says the UK is ‘already in a recession. I have no idea if I can raise money at all for a deal now. The limit on deals from banks is now only £20 million.’
According to Moulton, the chief executives who will prevail will be those who have a ruthless, cash-driven approach, with an emphasis on budgeting, forecasts and key performance indicators.
He says: ‘Companies have the choice of either doing nothing and probably going under or planning ahead and realising things will be bad for the next four to five years.’
For those businesses with healthy balance sheets, Moulton sees lots of opportunities. ‘Cash-rich companies can eat the poor either in terms of business or customers,’ he comments, noting that now is a time for wiser heads that have the battle scars of previous downturns.
‘If it weren’t against the law to discriminate in favour of someone’s age, I would advise choosing an older manager who has seen recessions before and is less likely to take risks. Right now you don’t want some lively youngster who is looking to grow the company.’
Moulton, speaking at an event in London, added that lending based on property assets is set to collapse. ‘This will happen with commercial property very shortly, which will be hit in a big way,’ he said.