Private equity firms entered 2011 with renewed confidence and high expectations, and this year’s strong performance suggests the asset class has indeed bounced back. Improved credit markets and record levels of cash reserves are the primary drivers of activity. Only the availability of suitable opportunities stands in the way of further capital deployment. Despite the optimism surrounding the sector, PE managers seem wary of becoming too bullish. Over exuberance may well be the principle risk to the industry over the coming months, and pricing and leverage discipline should be watchwords for all.