Moulton slams buyout due dilligence 'collapse'

The head of private equity firm Alchemy has issued a stinging broadside to the accountancy trade, citing a 'complete collapse' in buyout due dilligence at the height of the private equity boom.

At CIMA's annual conference, The firms MD John Moulton said: 'We have seen in the last two-year bubble [of private equity buyouts] a loss of integrity in the system and we have seen excess. We have seen a complete collapse in due dilligence. When many of the processes and controls are not there, you have a high risk of serious errors and a sporting chance of fraud.'

Moulton also warned City bosses that the private equity model is heading for significantly lower returns because the schemes that banks underwrite when companies secure debt are in short supply: 'The money from Collaterised Loan Obligation vehicles has now dried up – there simply is no money left. Large buy-outs are therefore un-fundable at present. I predict an era of significantly lower returns.'

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