It goes on: "Considering that Mr Morris puts the average annual fees in private equity at 8 per cent – some put it higher – this is thought-provoking. It means, in effect, that the pension funds which provide the bulk of the money would have been as well off investing in the market directly and borrowing the leverage from the bank."

At a time when fundraisings are under pressure and the PE model is in danger of over-regulation, firms are going to be looking hard at deals where there is a strong "management" component and where growth contributes a higher level of the overall return. (Of course, this kind of analysis usually focuses in on the big LBOs - in the mid-market, leverage has never played such a major role...)

Growth and development means having financial management in situ that goes beyond box-ticking, solid reporting and cost control. Great news if you're a forward thinking, value-adding FC or FD, then.

Let's start with the Carbon Reduction Commitment. I recently did an article on the FDs of PE firms, and this is a biggie for them. As far as the Environment Agency is concerned, PE funds are conglomerates, so every "subsidiary" (i.e. portfolio business) stands to get caught by the new rules on September 30th. Worth boning up on carbon credits if you're going for a job... especially since CO2 is now the CFO's responsibility, apparently.

Then I'm recommending the Wall Street Journal PE blog. For example, this entry has a link to a PBS report on the PE takeover (and subsequent bankruptcy) of Readers' Digest. If you're getting involved with PE for the first time - don't panic. It's an extreme example. But the WSJ (and other) PE blogs are good at explaining sentiment for the industry.

Third up, more video - this time coverage of a recent Grant Thornton survey that has positive news for the UK where the firm predicts "billions" will be invested over the next 12 months. Deal churn is good - especially for FCs and FDs looking to get into a new position. And the year is looking better for MBOs in the UK, too. So keep 'em peeled...

Looking for something a bit more technical? How about a scholarly paper on why buy-outs are leveraged? This PDF download posits a model for the capital structure in MBOs and might be worth a read if you plan on getting down and dirty on the technicalities with your bakers.

Finally, stat of the week, courtesy of Reuters: "Private equity-backed M&A in the second quarter was up 125% from a year earlier to $40bn, and up by a third from the first quarter. For 2010 [H1], it totaled $70bn, more than double a year earlier." BUT... "The $70bn of PE-backed deals this year through June 22 compares with the record $542bn in the first half of 2007."

Well, it's back. I was chatting to a lawyer specialising in VC deals this week, and he says it's worse than ever. The problem is that less debt is ratcheting up the risk for equity providers - and a sluggish economy means that they know they need a watertight business case if they're to get the confidence they need to take the plunge and buy a company still in development. It's a contributory factor to the Dearth of Deals™ - and to the slow recovery.

One way to address the central problem - perceived risk for equity providers - is to show the business is clearly out of start-up phase and has the chops to move forward decisively. And that means hiring a decent finance exec.

For many business suffering from the equity gap, that might not be a fully-fledged, six-figure FD. But at the least, they need a decent controller to nail the cash-flow and related processes and put in place working budgeting and forecasting systems. And they need FD-like advice - from a part-time or interim FD, or perhaps a finance-minded non-exec.

Claiming you can't afford "back office" talent in a growth phase is false economy - and that applies whether you're an entrepreneur or an early-stage investor wondering whether you'll ever exit...

My data is largely from the US. OK, most of you are looking at UK opportunities - but I think the lessons still hold. For example, this chart shows the amount of liquid assets held by US corporates (and I know from anecdotal evidence that the picture is similar over here):

That's a lot of cash without a home. The picture gets worse: private equity funds around the world have been wrestling with "overhang" (funds committed by investors or "LPs", limited partners) for some time. The best recent estimate of PE's undeployed cash? Check out this PwC article on the subject. It says: "The current private equity overhang at nearly $850 billion (three and a half times the overhang in 2000) represents 54% of all capital commitments made between 2004 and 2009. Over 85% of the $850 billion is in funds larger than $1 billion, including 48% in funds larger than $5 billion, according to Cambridge Associates."

Result? LPs are reluctant to commit new cash, and while the big LBO players aren't that fussed - that unspent pile of cash is the bigger concern - the mid-market and VC end of the scene is taking a hit. Witness the recent drop in US VC fund allocations.

So what does this all mean for you? First, brush up your capital allocation skills. Investors (and corporates - although the fact you're here suggests you'd rather not work for a plc!) need to deploy money. But they're petrified that they won't make a return on it. That's a pretty damning indictment of the economy when interest rates are so low. And I think it means there aren't enough creative finance execs with good communication skills out there, standing up the business case for investments. Great entrepreneurs and marketing people are one thing; but without a proper investment appraisal, properly communicated, that cash is going to remain dormant.

Second, pick your markets. PE firms - particular in the mid-market and at the VC level, but across the board now that financial engineering is a dead duck - need growth right now to turn a penny. And with the economy flirting with a double dip, that means plumping for companies that have a compelling case whatever the climate. In short, some sectors are more resilient than others. Choose wisely.

(By the way, here's a link to a rather goo, rather long article on PE at the moment - worth a read if you have a few minutes spare.)

Well, the bad news is that messages from both sides of the Atlantic - and in both the large buy-out houses and the (more interesting) mid-tier firms - continue to confuse. So on the one hand, we have some mega-deals in the secondary buy-out market in the US; on the other, fundraising continues to fall there, especially for the mega-funds. (That might have something to do with the fact that investors around the world are starting to ask tough questions about PE returns...)

What about this side of the pond - and what about those mid-tier players whose deal-flow creates openings for smart finance execs? The news is, again, mixed. At the bottom end - where many of you might reasonably spy exciting start-up and development opportunities working with creative entrepreneurs - VC funding is approaching record lows. A NESTA report says fewer funds are raising less capital for smaller early-stage investments. The one glimmer of hope for FDs and FCs is that VCs are taking a longer view of investments - giving you more time to get it right.

The good news? I'm still hearing lots of PE players talking about a flight to quality. Sure, they're nervous about overpaying for businesses - especially when competitive auctions result in very rapid and sometimes hasty due diligence. But if the business looks good and shows opportunities for strong organic growth (i.e. generating more cash without needing a ton of debt to do aquisitions), they want to buy.

That's doubly good for you because it means PE firms looking to sell - and boy, do some of these funds need to churn investments - need both great financial management in place and the kind of broad finance functions skills that will help them dress a business for sale. Time, perhaps, to brush off those financial reporting and investor relations skills.

Take this article on fund raising. LPs (limited partners are the people who commit money to PE funds) are back on the trail for investment opportunities in PE - and although they still have "concerns about capital overhang [that] may keep the flow of new money to modest levels," there's clearly a view that there are returns to be made in new deals. The pressure is on GPs (general partners, who manage the investments) to prove they've got a use for the cash.

Meanwhile, emerging markets PE is doing really well. In India, for example, Ernst & Young is reporting conditions set fair for a boom in deals. And Iraq is also an unlikely source of joy for PE investors. (Compare and contrast Spain, where the picture is less rosy.)

It's worth adding that as well as tickles for new deals and new funds, the industry is re-shaping in other ways. We blogged last week about Barclays selling its PE arm - now HSBC is flogging its own PE divisions (and, like Barclays, it's letting management have the businesses for next to no money... read into that what you will). And, if you're looking for a much more obviously troubled example, Dubai International Capital looks like it might fold.

All change then - keep your eyes peeled and make sure you know what your backers are going through before you commit.

This got me thinking about how finance execs can use social media, partly to stay in touch with their industries and their colleagues - and partly to project themselves into the "interwebs". For an interim like Paul, that's probably more important than for FCs and FDs looking for, on working in, perm positions. But it's still an interesting way to be connected to a wider community.

The "staying in touch" part is important, too. It's well worth setting up Google News Alerts for topics that are relevant to your business - and to businesses you'd like to be in. And why not set one up to feed through coverage of "private equity" or "MBO" to your inbox each day or weekly? It's a great way of staying informed so that when opportunities do arise, you've got plenty of background knowledge to throw into the conversation.

I'll do a link list in a few days of sites that I find useful for staying on top of the PE scene. In the meantime, check out Mashable's advice for VCs on using social media.

It seems Barclays Private Equity is buying itself out from its parent bank. Naturally, this is in part due to a new conservatism in banking (although Barclays was far from being the worst-hit in the financial crisis in 2008). But it also hints at a readiness to get daling again. Reuters reports sources claiming: "Barclays PE will target between 1.5 billion and 2 billion euros for its first independent fund." That's its first new money since a fund launched in 2007 and suggests there's going to be some acquisitions towards the end of the year.

It also suggests the guys at Barclays PE will have a new-found understanding of the pressures of being an MBO team. We'll see (and if anyone does an MBO with them after their own buyout in the summer, let us know how it goes!).

Ed specialises in turnarounds, so he's used to turning up, identifying problems and coming up with a "like it or lump it" fix. (He used to joke that his first job on an assignment is to find a desk in credit control - it's amazing how much better things can look once those guys have been hitting the phones all day for two weeks.) In better times, he tells me, you'd often get a situation where the incumbent management would bristle at the proposed changes and walk out - usually to a job with another company "across the street".

For Ed, that was often a problem solved. Those were usually the guys who'd caused the business to run onto the rocks and bringing in fresh blood can be crucial to fixing the strategy, the culture and the day-to-day running of the company.

Now? Not so much. Thanks to lack of management churn - and a shortage of growing businesses - management teams are clinging onto their posts for grim death. That means more fights in the boardroom, more diplomacy and psychology ("the first step to recovery is admitting you have a problem") - and more hassle.

The good news if you're looking for a PE-backed finance job? The banks are still calling the shots on many deals and they want a solid finance function to work with. And as Ed's busy schedule attests, interim FDs and smart financial controllers are much in demand to fix basically sound companies that have lost their grip on the financials. Just make sure you're ready to handle the fifth columnists in the board room...

But I watched an interesting snippet (podcast? vodcast?) from Standard & Poor's earlier this year pointing out that although the banks are wary of making new big loans to PE-backed businesses - largely thanks to a more conservative approach to their own balance sheets, but also because of THE RISK! - other sources of finance are coming in. A variety of investment funds need yield, and higher-risk LBO loans can deliver.

Better yet, said the S&P guy, many lenders are cutting PE-backed firms some slack in the interim. What choice to they have? Sure, in really bad cases they can grab the equity, but that rarely ends well. So all sorts of mezz-type finance and coupon roll-overs get layered in and everyone hopes for the best. (Good news for finance functions, politically at least. You can get a lot of status for carrying that much water...)

PE firms are also paying that (rather forced) good-will forward bt being nice to entrepreneurs and their teams. I noticed this entry at a Wall St blog on the subject of VC-backed management scoring their bonuses even if things have gone a bit "off plan":

I thought it was pretty funny how VCs have to handle entrepreneurs with kid gloves these days, if for no other reason than if you won't another VC will. That probably speaks volumes to the fact that there are too many venture capitalists chasing too few deals these days. But I was more struck by the expectations of the entrepreneurs than I was by how the VC's deal with them today.

Interesting. In short, if you're in a good team with a business that has obvious potential, perhaps the rewards (bonus, equity etc) will come even if you've been troubled by the recession.

Well, there's more evidence mounting up of a stampede for quality - and it's starting to look like a bit of a bubble. (Full story here, but requires WSJ.com subscription.) Dealogic says the value of buyout deals in Europe alone so far this year is EUR9bn, compared with just EUR3.7bn for the first three months of last year. Jennifer Dunstan, partner at 3i is quoted as saying: "Prices have stabilized and debt is trickling back, but there is a very limited supply of high-quality assets and some funds are looking to make deals very aggressively."

Bubbles are almost always bad news, of course, and it begs the question: should you get involved in a PE-backed business you think has been overpaid for? There's no easy answer. It depends on the company, the other members of the management team and the PE firm (as well as its general partners). You might argue that PE firms that have "aggressively" bid for assets are going to be a whole lot more... "attentive" and that might make the finance function's job a bit tougher.

But if the team, the time and your talents are right - well, so long as your eyes are open and the incentives good, being a FD or FC in a backed business can be as rewarding as ever.

Part of the problem is that the list of targets that PE firms - of all sizes - are chasing has split decisively into two leagues. In the Premier Division are attractive assets with high-quality earnings and predictable revenue streams. Buyers can see growth opportunities and sell the deal to finance providers. (Despite that wall of money, the LBO model doesn't stand up without a fair chunk of debt, of course.) Everything else is Blue Square South - and the banks are still running scared of anything where the risk can't be tied down six ways from Tuesday.

There are two pointers here for FDs and FCs in, or chasing, equity-backed opportunities. First, if there's even sniff of a deal, due diligence is now central to the process. Jonathan Heathcoate, partner at Palamon Capital Partners, told me last week (for a piece coming up in Real Deals next month), “I think [at the moment] you might describe it as ‘more than comprehensive’ and maybe even a little bit anal." There's plenty of cynicism to go round, and according to a couple of dealmakers I spoke to, and no-one believes a hockey-stick revenue or profits forecast right now. The numbers are all important.

Second, chase the money. OK, it's true that even the mid-market companies are going to struggle to get a slice of that $503bn; the sub-£100m deals that make up the really interesting, rounded finance jobs that crop up have no chance. But where the numbers stand up and the opportunities are clear, there is money available from all sorts of PE players. Go for it.

In short, it says America has got rubbish at manufacturing because MBAs have come to dominate management teams - and finance (rather than production or logistics) has come to dominate MBA courses. As a cheerleader for finance functions, I don't see this a critcism of FDs or controllers. Instead, it's a rallying cry for rounded FDs and FCs, people who have a good grasp of operations and other disciplines. In my experience, they tend to be better at the finance bit and more suited to CEO and chairman roles (if that's what they want).

I'm not alone. An old friend Jim Weight used to be CFO at Westminster Healthcare and HIT Entertainment, so he has bags of PE portfolio experience. Now he’s working with EPIC Private Equity looking for turnaround situations, where a vice-like command of the finances is job one. But he argued that the recession has forced FDs to look more broadly.

“A real understanding of the commercial aspects of the business is important too,” he says, “because without that you can’t really achieve a key attribute we look for in an investee FD: an ability to forecast. If you go to the bank and say, ‘I’ve been doing lots of work and I think I’m going to have a cash problem in 18 months time’, usually the reply is that you can have as much money as you like. If you’re that on top of your business, then you’re exactly the kind of person they want as a client.”

Great point, Jim. Get your hands dirty out in the business and you'll be a better - and much more valuable - finance exec.

Here's how he replied: "I had lunch in London with an old friend who had checked me out on Linkedin and mentioned that my profile suggested I had only had two jobs. Given that I did not even know I had a profile, I was quite impressed. But he, being a headhunter, said this was terminal for my non-exec aspirations as Linkedin apparently is 'all the go' in the search community."

It's not uncommon for people to have a dormant profile. Perhaps this CFO accepted a LinkedIn invitation via email a couple of years ago, and never did much more than acknowledge he'd worked with the people connecting to him. But whatever the reason, a quick update of "positions held" and skills is on his to-do list now.

The point being: you can be checked out online, so you may as well make it easy for people to see a rounded version of you there. I'm not saying a PE firm or the guys at EquityFC and EquityFD will see it as a clincher (far from it!). But it can't hurt to present yourself in a forum that some people might be using to evaluate the basics about you.

Is there any good news in the numbers? Well, secondary buy-outs have plummeted as PE firms play cagey with each other in the absence of debt to justify deal mechanics. I think that's broadly good - SBOs do skew the market a bit and can often come across as being justified by financial clout rather than operational excellence.

More interestingly, two-thirds of buyouts so far this year have been under £10m. That is very good: it shows that smaller and potentially high growth companies are still in vogue - and they make the best businesses for broad-minded FCs and FDs, too.

The decline in deal activity is forcing many PE firms to think long-term - which is also good for smart financial managers. Lots of other people think so, too. When PE firms go long, they look for operational gearing, not financial. That means a more interesting and creative role for the finance function, a better shot at job security and - perhaps best of all - a chance to learn a huge amount from the operational experts that the PE firm will wheel in to help effect performance improvements.

Yes, your shares might gather a bit more dust on the shelf. But when they pay out, it'll be a much sweeter taste in your mouth - and you'll be more versatile as an FD to boot.

I'm not so sure. Private equity should be working very hard right now to put itself well above any suspicion. After all, with hundreds of billions of dollars-worth of debt falling due in the next couple of years, there's going to be an awful lot of bad press as funds' equity is wiped out by bondholders.

This looming PR disaster (well, PR and, y'know, collapsing companies and mass unemployment) is well articulated by Josh Kosmanin this video, where he's plugging his new book. It's worth watching for a reminder about the danger of high leverage - although the fact you're reading this at EquityFD and EquityFC suggests you're looking for a challenge that's not merely about financial engineering.

Kosman signs off by asking why the debt interest tax shield is still in place. And his argument is pretty good. Tax relief on interest is there to promote investment in growth, not a gamble on enterprise valuation. And if ever politicians did get bold enough to repeal it (hint: they won't...), PE firms would have a lot more to complain about that a few extra disclosures.

What's telling, however, is how management figure in all this. I was surprised, for example, that when one of my old employers breached its debt covenants, the bank left a chunk of management's equity in place. Incisive Media is now owned by RBS, more or less, with Apax having taken a bath - its stake fell from 49% to 2%. But management kept a big slug of equity on the grounds that no-one's going to see much of a return if they just toddle off in frustration.

That's worth bearing in mind if you're looking at a PE-backed position. Of course, PE investors have a (some say deserved) reputation for being tough on management - and for rewarding them well if they perform. But they also need management to be bright-eyed, bushy tailed and in a positive, well-incentivised frame of mind. So if you know you can add value to a business - don't be shy about getting the right rewards.

(Oh, and get your PE backer to borrow far too much money, too. They might have ideas about how to run your business - but the bank almost certainly has none, so when they're in the driving seat, they need you even more!)

The US National Venture Capital Association's exits survey shows that Q3 2009 was... well, OK at best. Certainly the down trend is over, and there's plenty of optimistic talk. But the NVCA's chief Mark Heesen had this to say: "The fact that the many in the media are classifying three IPO's as resurgence is evidence of how low our expectations have become. [That includes this blog, of course. Although we didn't put a rogue apostrophe in "IPOs", so nyah.] ... While the psychology of the market is trending positive, our original forecast of a true recovery not beginning until 2010 still unfortunately holds true."

Meanwhile, Dow Jones had slightly higher numbers for Q3 exits (71 M&A exits for $2.25 billion), but was equally cautious. Green shoots, then, but no mighty oaks.

On one other measure, we can only hope PE has bottomed out: fundraising. According to data from Prequin, Q3 2009 was the lowest quarter for harvesting new funds since 2003, with only (only!) $38bn raised worldwide.

Actually, I think that's still a lot of dough, and the fact that deal activity has remained limited means many funds must still be sitting on some of that $400bn global cash overhang that was much talked-about in the summer. So I'd be cautiously optimitic about next year (except for the big LBO players, who remain terminally borked by the debt markets and the collapse of sentiment in their model).

Caveat: A big factor looks likely to be the stock market in the run up to year end. If the froth - and it is very bubbly - blows off, that might dampen the enthusiasm for IPOs. Equally, higher unemployment could stall an economic recovery, making even operational improvement plays tough for PE firms. In the UK, then, we'd better hope this silly politicians' game of "who can promise the deepest cuts in the public sector payroll" goes away...

Well, I'll start with fantastic news from NVM Private Equity, which has just exited from medical diagnostics firm DxS for a record-breaking return of 13 times money (providing earn-outs all click, of course). Disclaimer: I do help NVM with writing tasks, but the numbers are impressive. And they show one thing very clearly: smaller and mid-market PE houses are fun to work with. DxS had its hiccups on the way - including a big change of strategy when the market it was targeting didn't play out. But NVM backed the business through thick and thin over eight years. They also tweaked the management team when the strategy demanded it - creating opportunities for new finance execs, of course...

But the exit joy is not confined to these shores. FT Alphaville reports that things are looking up in AsiaPac, with big IPOs and trade sales. As confidence creeps back into the markets - particularly important as the secondary buy-out market hasn't quite yet taken off - we can expect more of these deals. Just look (ahem...) at the New Look IPO, slated to value the PE-backed business at £1.7bn.

It's not all buoyant. Richard Fletcher in the Telegraph reports a doomish conversation with a PE GP, alleging that the party's over for the PE model. Well, he's wrong. Massive leverage and debt-enhanced equity multiples might well be a thing of the past - as Fletcher points out, public money investors will be wary of debt-laden companies like Jessop's coming onto the markets.

But PE is so much more than that – as hands-on, operationally driven firms like NVM make clear. Slaving away over the working capital and thrashing the cost base aren't any financial controller's idea of a good time. But spotting, evaluating and executing on market opportunities with a motivated operational colleagues and an interested, experienced and enthusiastic backer? That's more like it.

Perhaps most famous for the deal he didn't do - he was denied the chance to buy Rover, which went instead to a group who had no idea about turning it round but managed to pay themselves handsomely while it went bust again - Moulton was nevertheless a highly effective, straight-talking accountant of the old school. I interviewed him about six years ago and thought he was articulate, direct, fair and trustworthy - not bad for the PE industry!

That makes his departure all the more shocking - although the openness and directness of the resignation letter are not so surprising. He reveals that he's fallen out with fellow board members - whose own limited deal-doing record he exposes - over a shift in strategy from turnarounds to deals in the financial services sector.

Moulton is a loss to the industry. Although many a management team feared his no-nonsense approach (he told me that he fired around 60% of the FDs of portfolio companies they invested in!), the turnaround market is poorer for his departure. If I saw a chance to generate massive operational gains by rescuing a battered business, I know which backer I'd have wanted.

Happy retirement, Jon.

Carried Interest flags up these five new realities that he feels will define the industry for some time to come:

1. Fewer PE firms.
2. Tougher fund terms (which means lower fees and less generous carry terms for general partners).
3. Longer hold periods (although personally I think that's still a function of market buoyancy, not some newfound doctrine of sustainable ownership...).
4. Much less debt (CI reckons 50/50 debt/equity is a new norm; again, I'm not so sure GPs have fallen conclusively out of love with leverage - but gone are the days of fractional equity...).
5. Improving GP operating skills. This is actually tied pretty closely with the longer hold periods and lower debt, of course. But it's right that the quality in the industry - GPs who help management teams add operating value - should rise to the top and out-price (or out-risk) the financial engineers.

I think that all adds up to excellent news - if these are, indeed, new norms and not just a relatively short-term industry hair-shirt. It's particularly positive for finance execs. In most respects, the FD (and even the FC) role is becoming more outward-facing and, frankly, interesting. When financial engineering ruled the roost, I got the feeling some PE-backed finance execs felt a bit pressured to be number crunchers. These new realities should help them be more rounded again.

First, debt is creeping back in. Banks might balk at offering recession-hit mid-tier businesses working capital loans. But they have to earn a buck somehow. Lending - albeit at more sensible multiples - to fund cashflow positive buy-outs is a good call.

Second, the market is picking up. There's been a total drought for exits, but with the markets ticking up and corporate strategy (as opposed to cost-cutting) back on the boardroom agenda, the market could get going again. The Deal also says the secondary buyout market is due for a comeback, too.

Third, the industry has recalibrated. I think a genuine sense of contrition has developed in the PE industry over the past year. Massively leveraged deals and wanton profiteering during the boom years has created fall-out (just look at Reader's Digest). Practitioners know they can and do create real value beyond financial engineering. That's why many of the new funds being raised are targeted at mid-market buy-outs - "investors showed a particular preference for middle market-focused shops," claims The Deal about this summer's fundraising - funding growing businesses that can generate true value in the right hands.

Hopefully that will be great news for the mid-market scene in the UK, too.That money has to be spent at some point - so polish up your business plan.

PS - Just a final word of caution. There is still a massive - £100bn-ish - mountain of debt in British business due to be renegotiated over the next 18 months. How that particular problem is handled (both by individual companies and the banking sector as a whole) is going to be a factor in any upturn for the mid-market PE industry.

1. Get the board pack out 48 hours in advance - so no-one has an excuse for not being prepared. (To which I add: this makes finance function discipline and solid business intelligence processes a must.)
2. Have a less formal chat beforehand - Feld suggests lunch or dinner the night before. (With tight schedules - especially for GPs - perhaps board meetings after lunch are a good plan. Or schedule a breakfast get-together?)
3. Start with the admin stuff and get it all done within 30 minutes. (Nice touch - it means all the necessary stuff is done with zero defects and warms up the board for the meaty debate to come.)
4. Discuss a one-slide financial summary for the period. (Again, sensible stuff - let the numbers tell the story. But the onus is on the FD and his or her team to get that slide just right. Don't overcomplicate it - but keep it informative.)
5. Then the CEO offers a one-slide bulletted agenda for the rest of the meeting.

The best thing about this tip list? There are only two pages to consider in the meeting. The meat of the data all comes in the board pack and the focus is on useful debate. The PE GP should love it.

Awkward silences at the Dragon's Den

If that seems a bold assertion, consider this: there's now estimated to be $1,000,000,000,000 of private equity cash sitting on the sidelines. As bloggingbuyouts explains: "The United States led the world with $608.9bn in uncommitted capital, with Europe at $286.3bn and the rest of the world at $183.4bn. The buyout sector remains the largest with $507.1bn in dry powder waiting for acquisition targets to be identified. Real estate funds are sitting on $194.1bn, and venture funds have $153bn waiting to be put into action."

While that's going to create a lot of activity - and openings for finance execs, natch - two other things to bear in mind. First, if you're already PE-backed, your GPs might well be able to fund acquisitions if they have a compelling logic. A recession is a great time to build a new corporate giant, and if we have a double-dip downturn, expect acquisition prices to drop to attractive levels around Christmas.

And second, those prices are going to climb pretty soon. If the floodgates open - and I think we're talking about an obvious and sustained return to economic stability plus a bit of liquidity in debt markets - competition for assets is going to fierce. So smart FDs and FCs will be working hard to show their own business is as efficient as possible in areas like cash conversion - instilling confidence in their backers to act early and beat the rush.

That's been sort-of good news for finance execs. PE firms have had to focus on performance issues at portfolio businesses - often bringing in or beefing up a finance team including and FD or FC. And we do like to see exciting opportunities for finance execs in PE-backed businesses facing interesting challenges.

No it seems one exit route - flotations - is back on the agenda. KKR is reported to be putting several of its businesses into the market -but it's not hard to find news of several other sizeable IPO exits on the starting blocks, including Bird's Eye, United Biscuits and Weetabix.

But here's the thing: does that really make any difference? Having had its worst year on record in 2008, private equity was never going to just roll over and die. PE firms have responded with more focus on operational improvement than financial engineering (and so much the better, say many of us). They've engaged in equity-only deals, commonly using innovative debt swap tools - like the recent Foundation Group acquisition by Gresham Private Equity.

And in the mid-market, at any rate, deals have continued to flow, albeit at a slower pace. Point being, the re-emergence of the public equity markets as a potential exit route is welcome - and should have those of you interested in PE-backed FD and FC jobs weighing up the kind of skills or strategy you might bring to the party these days.

But it doesn't change the fundamentals for fast-growth, equity-backed businesses. Strong all-rounders with good general business skills, a steely grip on cash, sound communication skills and leadership qualities are always top of the shopping list.

I posted yesterday that secondary buyouts tended to the frothy side of deals, especially compared to IPOs and trade sales. That's still true - but if Goldman's funds are planning to snap up assets on the cheap and build them through a recovery, that's still better than naked financial engineering. And that sort of deal is much more fun for FCs and FDs, too. It's about creating value - not just scrambling for cash to pay down debt.

At its heart, this isn't a government bail-out - it's a smart investment decision. The bank (actually, AIB is also into Dyas for a fair chunk of change) has looked at what is basically a decent company - it's still profitable - and decided that it's loans are better served by taking over from the equity investor than by liquidating. Crucially, it's brought in new management to ensure the business is run with more discipline. Former Kingfisher and MFI director Stephen Round (OK, he's a marketer, not an FD...) and corporate turnaround specialist Ian Gray, an accountant by training, will take over. With revenues of £100m, they should be able to manage cash more aggressively and keep the thing going quite happily. Does this mean banks across the land have remembered that helping to finance businesses in temporary financial difficulty is their job? Probably not. But it's a high profile example that they do sometimes remember to apply common sense.

It also shows how the old private equity leverage model is, well, broken. Change Capital only injected £10m when it bought Dyas for £61m five years ago (as well as handing over £17m to the incumbent management team!), a decision that now looks foolhardy. OK, so its downside is limited to £10m, but without all that debt to service, who knows how long Dyas could have traded quite happily - into the upturn, probably, and a much better result for the investors and the banks. That's not a direct criticism of Change - my target is the model than prevailed in the boom years for PE, when returns were the only consideration and too much financial risk was lumped into investments. (Mind you, with luminaries such as former M&S boss Luc Vandevelde on the board, you'd have thought they could have made a better fist of running a retail business.)

Final point: robust, well-established mid-market businesses like Robert Dyas are more than capable of weathering the downturn. Heck, with Woolworths out of the picture, Dyas is pretty much the only High Street ironmonger left trading, so it ought to do well. (I love it, personally. Bought a sweater de-bobbler there this weekend.) But they need sensible backers and, crucially, disciplined financial management to do so. Dyas is a reminder than in additional to tightly-controlled finances, PE-backed companies need to be operating under the right long-term financial strategy, too. Massive leverage at a time of wobbly cash-flows isn't it.

Let's start by getting a little more sanguine about those fundraising numbers. Here's the quote (which probably comes from a press release, given that it's repeated almost verbatim in the Indie, the FT and elsewhere): "A total of $45.9bn (£32bn) was raised for 71 private equity funds in the first quarter of the year, according to Preqin. This is the lowest figure since the final three months of 2003, when $34bn was raised as the global economy emerged from the slowdown resulting from the implosion of the dot.com boom. The total compares with $125bn raised in the fourth quarter of last year."

That is a big drop, alright. But given that the compound annual growth rate for funds raised between 2003 and 2007 was 47.6%, something had to give. Bear in mind also that 15 years ago $46bn would have been a stellar result for the whole year, never mind the second quarter of a major global recession. It's still a heck of a lot of money.

The press release goes on to talk about the number of funds extending or postponing close - a sign, clearly, that they are in biiiig trouble. Well, sort of. More importantly, it continues: "the number of active fundraisings has continued to rise year on year. In January this year there were 1624 funds on the road targeting $889bn, compared with 1304 funds chasing $705bn in January 2008 and 918 targeting $396bn in January 2007. By March this year, the number had risen to 1673." Well no wonder some funds are having trouble closing!

Apart from anything else, anecdotal evidence suggests that many funds are over-capitalised and have been for a couple of years. A dearth of deal opportunities - prices have only fallen hard for assets you really wouldn't want to buy - means many PE firms are holding tight and waiting for some sign of what we can expect from the economy in the medium term. At heart, many PE managers are just arbitragers: their skill is spotting the upturns, either for individual companies or whole sectors, before anyone else.

So not only is the FT headline about investors steering clear wrong - I think we'll see much more activity from PE firms in the back half of the year. By then, many corporates will be feeling the pinch of lower cashflows and expensive re-financings and will have to be offloading good businesses at reasonable prices. Punting on an end to economy contraction in H1 2010, PE firms will start buying, aiming to find both "rising tide" returns and get stuck in with restructurings and consolidations aimed at exploiting new economic realities beyond 2012.

That's where you come in. Right now, much of the demand for finance execs is coming from PE-backed companies working hard to survive. Good planning, iron-willed control of cash and great communication skills are the watchword. But hold tight later this year: when new deals start rolling, PE firms are going to be looking for finance execs who can combine those skills with the ability to bring discipline to growth and creativity to structure. It's gonna get interesting...

Meanwhile, the mainstream media - as yesterday's G20 coverage shows - just love to manufacture short-term scare stories. After all, they're just tomorrow's chip wrappings...

One such example is the Gulf states where, according to PrivateEquityBlogger, Carlyle has just committed a $500m fund. (It also covers North Africa, interestingly...) At a recent conference in Dubai, Abraaj Capital CEO Arif Naqvi explained why the Gulf is interesting PE firms: "The public markets are paralyzed and closed, not just regionally but globally. Well, we are the alternative option. Private equity has a good name in this region. People have seen how value has been created."

Well, well. Because if that's true of the Gulf states (which are far from being unaffected by the global recession), it's also true of the UK. And if you translate developing economic interests in North Africa and the Middle East into innovative businesses in the UK, you can make a convincing argument that the mid-market privately-held sector is where it's at for ambitious finance execs.

The rationale is simple: recessions change the rules. They make giant companies look ponderous and bloated. And while fast-growth companies might have raised cash in flotations ten years ago, these days "the public markets are paralysed" - giving PE firms an opportunity to invest those dormant billions and risk-alert execs the chance to be part of the kind of businesses that will change the game post-recession.

Some of those execs will be tempted overseas to deploy their skills in fast growth businesses in the Middle East - others will see that similar openings can probably be found no further away than East Anglia!

(Incidentally, while we're looking East, check out some of the inspiring start-up talk at Indian blog StartUpCentral. Recession or not, there will be entrepreneurs and there will be game-changing businesses that can grow quickly with the right financing - and financial management.)

That's interesting news for finance executives. While deal-flow creates upheaval in mid-market businesses - and job opportunities for FCs and FDs, especially in corporate spin-outs where there isn't any strategic financial management - the fact that many businesses are hanging in there but doing things differently (and many PE firms are still controlling businesses they might have exited a year or two earlier in better times) means they need different kinds of financial management expertise.

This is a well-worn theme here at EquityFC - but clichés happen for a reason: they're true. Hence the arrival of EquityInterim, which will cater for precisely that kind of opportunity. Don't count out the prospect of deals coming back later in the year and churning FC and FD posts afresh. But don't ignore the opportunities that exist right now, either.