Jon Moulton will be a hard act to follow, and his replacement at the head of Alchemy Partners, the private equity firm, can expect little help from his predecessor in settling into the job.
Dominic Slade, 38, was Mr Moulton’s chosen successor, handpicked by him from Harvard to join Alchemy in 1998. But, in an extraordinary twist, Mr Slade, who is almost unknown outside private equity circles, was named this week as managing partner.
Mr Moulton has, since he founded the business in 1997, been the public face of Alchemy and, increasingly, the private equity industry. Tall, physically imposing, outspoken and never short of a headline-grabbing quote, he largely overshadowed the British Venture Capital Association, the industry’s official mouthpiece.
Alchemy invests on behalf of institutions, often big US pension funds, and specialises in turnrounds of distressed businesses. In 2004, for example, it made £200 million from the sale of Four Seasons, the nursing home chain, then its biggest single investment.
Mr Moulton’s departure this week came as a shock to an industry that has always preferred to conduct its business away from the spotlight. And, adding to the noise, the explosive Mr Moulton, in typical form, lobbed a grenade back towards his chosen successor as he walked out the door.
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Industry insiders say Mr Slade, a private individual, had been happy for Mr Moulton to make the running in the newspapers, although he was involved in the abortive attempt in 2000 to buy MG Rover that brought Alchemy and its head into the public eye. “He’s not social — he’s quite a serious person,” says one person at a rival firm who knows him. “Dom is a lot younger, with a lower profile. He was happy to let Jon provide the media story.”
Any future exposure for Mr Slade will almost certainly include mention of the letter that Mr Moulton, 58, sent to Alchemy investors on his departure, more than a year before his planned retirement. Headed: “With profound regret. Alchemy is not what it was”, the letter went on to lambast his prot?g?.
On Mr Slade’s elevation two years ago to managing partner of private equity, Mr Moulton wrote scathingly: “He was the best available internal candidate given the situation we were in. There were reservations and actions taken to try to deal with these — a mentor, for example.”
Mr Moulton spoke of “continuing concerns” over his successor’s performance and said that Mr Slade had “a record of one write-off but as yet no profitable exits on deals he led” — an especially vicious comment in an industry burdened with debt and desperate to realise profits from its earlier swath of investments.
The letter claims the main point of difference was Mr Slade’s wish to turn Alchemy into a financial services specialist. But observers say the two men may have fallen out more than a year ago.
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In late 2007 Martin Bolland became the second of three founding partners to quit; Eric Walters being the first and Mr Moulton the last.
If Mr Moulton was Alchemy’s public face as captain, Mr Bolland was the anchor that prevented the ship from drifting out to sea under his watch, while Mr Slade spied out opportunities in financial services, such as Cathedral, the insurer, and Swift, the sub-prime mortgage provider, on whose boards he represents Alchemy.
Mr Bolland was seen as a controlling influence on the mercurial Mr Moulton and a reassuring presence for institutional investors. “Martin Bolland’s departure really crystallised this,” says his counterpart at a rival firm. “It was just a question of how and when Jon would go and Dom would engineer it in a way that would allow the sustainability of the fund that was so identified with Jon Moulton.”
Oliver Tant at KPMG, Alchemy’s auditor, says: “Alchemy has always been much more than Jon. Dominic, under both Jon’s and Martin’s tutelage, has been very successful. He’s a very bright and very talented individual.”
Mr Slade’s rise has been startling even for private equity, which tends to reward talent early. He took a masters degree in philosophy at Cambridge before going straight from university to investment banking at UBS and then catching Mr Moulton’s eye at Harvard. He is divorced, after a short marriage that produced a son.
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“Dom is just a workaholic,” says his private equity rival. “The only comforting thing for me is that he has no life outside work. Otherwise it’s, Christ, look where he’s got to.”
Unusually for a private equity firm, Alchemy raises capital on an annual basis. This could prove difficult this year, considering the financial environment.
Mr Moulton referred to this in his letter. “We have lost investment capacity from £400 million pa a few short years back to a likely £100 million pa within the next year,” he said.
One associate at Alchemy says: “I presume Dominic will adopt a more conventional strategy [than Mr Moulton] and seek publicity in a more modest way. What Dominic clearly needs to do is build a more substantial level of visibility among the investor base and in the financial services base.”
It is probably not an aspect of the job he is looking forward to.
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Rise and Rise
Born: April 1971, England; grew up (excepting school) Washington DC
Education: Marlborough College. MA and MPhil, Cambridge. MBA Harvard
Career: Investment banking, UBS 1994 - 1996.
Joined Alchemy 1998 Partner since 2000 Managing Partner, Private Equity since 2007