Speaking at Oxford's Said Business School this spring, Moulton argued that private-equity managers have much in common with the aforementioned fidgeting schoolboy. In his opinion, there is now an oversupply of capital entrusted to private-equity houses and an undersupply of worthy targets, causing bidding wars as these firms compete to find a home for their cash. This leads, he says, to over-eager investment managers with a surfeit of nervous energy and a dangerous urge to play with their money. Instead, they should 'sit on their hands' until the market cools - prompted no doubt by one or two high-profile, highly leveraged failures.
But if you work in private equity with millions under management, can you afford to restrain yourself and wait? Says Moulton: 'These days, winning an auction is one of the scariest things that can happen to you.' But as we see from the current levels of bidding activity, this doesn't seem to deter anyone. Telling an investment manager not to invest their money would be like giving the boy in the back row drumsticks and telling him not to make a sound. But, as any fule kno, the investment manager might do well to follow Miss Appleton's advice if he wants to emerge with an unspoilt report card.
Jenny Harris is director of JRBH Strategy & Management, www.jrbh.co.uk.