Private equity owes much of its success to the debt liquidity surge of the past decade. But now that stream is running dry the industry is facing up to new challenges. Some believe the business is returning to its roots in the 1970s and 1980s when it relied on the capital markets for acquisition financing, rather than on banks to extend loans.

Although most private equity firms underplay the importance of leverage in investing, debt is integral to the industry. Since the collapse of Lehman Brothers last year the top 10 buyout firms have invested $11.9bn (€8bn) in equity, just under 10% of the $120.4bn they invested at the height of the boom, as measured by the 12 months to August 2007, according to Financial News research based on Dealogic data.