Two years ago the most common complaint among financial buyers was the inflated entry price for private equity investments. While the sustained downturn in the public markets since the spring of 2000 has allowed cash-rich buy-out funds to acquire assets at lower valuations, the real problem facing Europe's private equity industry today is a dramatic deterioration in exit opportunities.

Despite a recent rally on the global equity markets, the appetite for initial public offerings (IPOs) , even for established and cash-generative businesses, remains almost non-existent and shows little sign of improvement in the short term. According to a survey published by Cinven earlier this month, only 21% of European bankers believe that the volume of IPOs will increase. This compares with 79% of European bankers who expected an increase six months earlier.