A strong performance in the first six months of 2011 left investors with renewed confidence and high expectations. Despite the optimism, PE managers appeared wary, and in the second half of the year, buyout deal value plunged as the sovereign debt crisis in Europe became all-consuming. Meanwhile, economic uncertainty threw off PE valuation models and widened the mismatch between buyers’ and sellers’ expectations. How then has 2012 compared? Have funds managed to increase their investment and exit activity? Is the asset class learning to live with the shift in market dynamics?