It is no surprise that people have begun to predict a dismal period for private equity. Although the industry hates to admit it, history shows it is prone to cycles and that these are closely linked to the stock market.

Looking at today's sky-high valuations for equities, it would be logical to conclude that private equity is in a precarious position. If private equity is buying companies at today's prices, prices not seen since the last boom era, it seems unlikely that when it's time to sell they will be able to make much of a profit.