UK mid-cap growth is not being hampered by a lack of ambition or aversion to risk, rather businesses face a precarious world beyond their control, according to Better Capital’s Jon Moulton.
Speaking at the Investec Entrepreneurs’ Summit hosted by Real Business, the outspoken private equity figurehead and Wonga chief executive Errol Damelin were against the motion that British companies are merely happy to survive rather than seek out growth by taking risks.
“The market cap of the Greek stock market is the same as the United States’ 400th largest company. The US ten-year treasury yield yesterday was at its lowest since the day after Hiroshima. We’re in incredible times. You don’t need to take risks to actually have risks coming towards you,” he said.
Whether the faltering economy, the public sector crowding out new enterprises or the mammoth financial sector draining personnel resources “there’s risk absolutely everywhere”.
Moulton’s comments on the panel come as the volume of UK M&A for the first quarter dropped to its lowest levels since the 90s, Grant Thornton data shows.
Just 478 M&A deals worth £17.1bn (€21.2bn) went through in the quarter, an 11 per cent drop by volume and value when compared to the last three months of 2011.
The data shows that UK companies have been less inclined to buy other businesses to build revenues or expand product offerings in recent months.
Conversely, the Office for National Statistics shows that capex is up, with businesses investment growing 3.6 per cent to £30.8bn for the first quarter.
Citing author Carl Sagan, Moulton told the crowd that: “Extinction is the rule, survival is the exception,” before adding: “Ambition is not the same thing as risk-taking. Ambition can be no more than making sure you do well, survive and prosper. For now it is time to survive. Risk-taking is for the foolish.”
But in support of the motion was Ariadne Capital founder Julie Meyer and Kevin Sneader, the managing partner of McKinsey & Company’s UK & Ireland operations.
“Why is it that so many of our companies choose to play at home and not play away?” questioned Sneader.
As well as challenging their export apathy, Sneader highlighted British firms’ tendency to avoid new financing methods compared to their US counterparts, meaning UK companies are more likely to survive rather than thrive.
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