The European venture capital industry was given a much-needed fillip at the beginning of this month, when two pieces of good news hit the headlines in the UK.

“It’s just another example of an asset-stripping private equity firm taking money out of a good business to line its own pockets.” It all sounds rather familiar, doesn’t it?

Just five weeks into the new year and already a host of exits – most of them secondary or even tertiary deals – have been signed. And these aren’t the basket-case turnaround jobs that we have come to expect in recent months; some of them even look positively toppy.

It is a great honour to be hosting UK Mid-Market 2010 this week. This conference, conceived and organised by Real Deals, and specifically tailored towards UK private equity’s mid-market, is the first of its kind – and will without question be the most instructional day of the year so far for the industry here.

As the European private equity industry returns to a new decade and new economic world order, Real Deals shares its predictions for 2010.

Turn of the century romcom What Women Want – starring Mel Gibson as hotshot executive Nick Marshall and Helen Hunt as his long-suffering boss Darcy Maguire – is nothing short of a modern-day parable for private equity.

The most talked about construction development on the planet lies deserted. Despite timely leaks claiming Richard Branson had his eyes on England and Brangelina on Ethiopia, Dubai’s “engineering odyssey”, The World, is today little more than a shipping hazard and eyesore – less island paradise than poignant reminder that even a multibillion dollar housing estate built on sand will weather no storm.

Buried in the footnotes of yet another private equity sentiment survey last week was one starkly revealing statistic. According to research conducted by Investec Private Bank, more than one in ten UK general partners does not expect their firm to raise another fund.

While Europe remembers an iron curtain that stemmed a flood westwards, private equity only has eyes for the East.

There is nothing like narrowly avoiding systemic failure to fire up enthusiasm for state meddling in free markets.

Almost every major military victory – and every major defeat – has hinged on a turning point, a single cataclysmic error made by one general and seized upon by another, that has altered the path of history.

Private equity is inordinately proud of the alignment of interest inherent in its corporate governance model – and rightly so.

Last month, the $365m IPO of Hellman & Friedman and General Atlantic-backed medical billing company Emdeon on the New York Stock Exchange marked the dawn of a public phase for private equity.

There has been a change of guard in this year’s 20 Most Influential. Following a survey of over 500 industry professionals – who were asked: “Who is really wielding the power in European private equity?” – Stephen Schwarzman, David Bonderman and 2007’s top dog Damon Buffini have nosedived into obscurity, while political movers and shakers from around the world are now dominating an industry in flux.

News that a handful of belligerent US endowments have refused to meet a capital call issued by German buyout house Nordwind will have sent shivers down many a GP’s spine, as they mutter “there but for the grace of God go I.”

Regulation. Legislation. Now generalisation – the most deadly of all. Brussels is continuing to lay siege to European private equity with an arsenal of all-damning and irrational law-making, and with all the finesse of a dancing rhino.

Former UN secretary general Kofi Annan once  said that arguing against globalisation was like arguing against the laws of gravity. But Annan also acknowledges that while globalisation is a fact of life, we have underestimated its fragility.

In October 1999, the inaugural issue of Real Deals was launched into an industry intoxicated by dotcom euphoria – and blissfully unaware of the blinding headache that the next day would bring.

Portfolio management has become the default setting for private equity investors in 2009. Once little more than a euphemism for twiddling thumbs or improving golf handicaps, buyout executives are now putting a career’s worth of blood, sweat and tears into keeping their investee companies alive – and, of course, their equity above water.

Another week, another sensationalist private equity headline. This time the industry must quake in its boots at the prospect of an investor exodus.

It’s official. The bureaucrats have taken over the asylum. The double whammy of
a UK budget that delves into the pockets of the wealthy while throwing money best spent on a private sector-led recovery into the hands of quacks and quangos, coupled with irrational European regulation thrown together by EU commissioners more intent on keeping their jobs come election time than a considered response to systemic risk, has struck a blow at the heart of capitalism – and of common sense.

From Nietzsche and Hobbes to the grandfather of market economics, Adam Smith, many of history’s greatest thinkers have placed self-preservation at the heart of the human condition. It stands to reason, therefore, that as money gets tight, altruism will go out of the window.

Two months ago, in this very column, and following market rumours that 3i was poised to merge with none other than Candover – just days before the extent of Candover’s troubles began to emerge – I scoffed at the prospect of widespread private equity consolidation.

Never afraid to court a little controversy, secondaries doyen Jeremy Coller stunned a packed room into silence – punctuated with nervous laughter – when he predicted that up to 50 per cent of private equity firms were destined to collapse within the next 12 months, at the EVCA Investor Forum dinner held in Geneva earlier this month.

It looks like it’s finally happened. The worst has come to pass. After endless months of political manoeuvring, mud-slinging and last-minute reprieves, European private
equity is hurtling head first into a regulatory wall.

Cinven, CVC and Candover.  Brothers in arms. Fierce rivals. The “Three Cs”.

Nothing, it would seem, is beyond the realm of plausibility in the current economic environment. The latest unlikelihood to be given serious credence is the improbable merger of Europe’s oldest private equity house 3i and any number of its buyout rivals.

Rumour has it that Lion Capital may be buying back into Premier Foods, the conglomerate behind household brands including Hovis and Mr Kipling. Lion, then Hicks Muse Tate & Furst, acquired Premier, then Hillsdown Holdings, in a 1999 take-private.

Life as we know it is over. Just flick through the pink pages – or if you are a real glutton for punishment, the Guardian. Just ask your pub landlord, your greengrocer, the shadow chancellor or Robert Peston. Credit-fuelled opulence is a thing of the past and private equity a capitalist throwback. From here on in it’s belt-tightening, bootstrapping and bankruptcy all the way.

If there were such a thing as an average private equity investor, he would be white, male, an accountant by training and would probably have just hit the big “5-0”.

Two weeks ago, Real Deals attempted to host a good news breakfast for the private equity industry. Even cynical journalists tire of unrelenting gloom. Improbable, but true.

Barack Obama’s landslide victory in the race to become the next leader of the free world has been heralded as a triumph for democracy, race relations and world peace. But as the US economy plummets ever deeper into recession, no amount of rousing oratory will steady this sinking ship.

Venture capitalists are renowned for their sunny disposition. Perhaps it’s the rush they get from creating tomorrow’s technology, or the infectious enthusiasm of the entrepreneur. Or perhaps it’s simply that eternal cheeriness adopted by those that have had their fair share of being knocked down.

Lloyds’ £10.4bn proposed takeover of Bank of Scotland remains some distance from the finishing line –indeed, following the government’s £500bn bail-out and surprise 0.5 per cent interest rate cut, the deal is no longer considered a fait accompli.

The banking world may be in meltdown, but private equity has frozen solid.

The outside world might be doubting private equity’s invincibility, but the industry is backing itself all the way.

When it comes to private equity fund terms, differentiation goes out of the window.

The European private equity community is solemnly marking the first anniversary of the credit crunch this week with an extended summer holiday.

As Western economies spiral headlong towards recession, curbing fat cat pay packets has become a political priority.

The Danish Walker report – as it has inevitably been dubbed – makes its namesake’s once revolutionary strides towards transparency in private equity seem just a little
half-hearted.

Soaring oil prices, plummeting house prices, Northern Rock and knife-wielding teenagers – nowadays, for a private equity investor to make the front pages, he has to be cavorting with rock stars or taking over a provincial building society.

Guy Hands is well known for his inimitable ability to construct an economic reality that throws the best possible light on himself – and on his firm.

The Royal Bank of Scotland’s decision to shut private equity out of the first round of bidding for its £7bn (€8.8bn) insurance business is a watershed moment for the asset class.

It is not often that the UK chief of a mid-market private equity house ups and leaves in the midst of an ignominious deal collapse. So when European Capital co-founder Simon Henderson walked away from the firm he helped create last week, the news was greeted with shock.

Of all the topics covered in this column over the past six years, the overriding issue that demands a definitive answer is “how private should private equity be?”

Private equity is win-win. Now the markets have got tougher, it is going to be “a wonderful time for buying businesses”. That’s what buyout bosses, notably Blackstone’s Stephen Schwarzman, say.

For everyone working in the venture capital industry, the news that 3i is leaving early-stage venture to focus on larger and later-stage deals was greeted with an air of inevitability.

Legal advice is a crucial component of any private equity deal. If Lyceum Capital is right, it could become the deal target.

CFIUS – it sounds like a painful venereal disease. And in fact, the Committee on Foreign Investment in the US, as it is somewhat more descriptively known, is indeed becoming an irritant for cross-border investors.

If Europe’s buyout investors can be thankful for one thing in today’s troubled markets, it is the “principle of certain funds” that prevails on this side of the Atlantic.

It’s a fairly well documented phenomenon (at least in Real Deals) that when big buyout bosses speak in public, they can often be strangely out of touch. But last summer their faux pas extended to a fundamental misreading of the financial situation.

When an industry is in upheaval, the decision to make redundancies can be vital to the long-term health of those businesses, and the wider economy – even if that is little consolation to the poor souls on the receiving end.

Mega buyouts will become anathema as deals dry up, bankers close for business and institutional investors turn their backs on a once-booming part of the industry. Oh no, that’s already happened. Here are some predictions for 2008.

Three years after cutting the apron strings and heading out into the world alone, Morgan Stanley spin-out Metalmark Capital has taken the unusual step of relinquishing its independence and returning to the investment banking fold.

Like it or loathe it, the buyout industry has turned an historic corner with the publication of Sir David Walker’s Guidelines for Disclosure and Transparency in Private Equity.

When HarbourVest’s debut listed fund of funds launches on Euronext at the end of this year, it will already be almost fully invested.

Two things happened last month to make internet investors sit up. European venture capital’s poster child, internet telephony business Skype, was written down by $1.39bn, two years after eBay acquired it for $2.6bn. Then the much-hyped social network Facebook completed a deal with Microsoft that implied a $15bn valuation for the start-up.

The UK’s venture capitalists have even less reason to be fond of their buyout cousins now. They are losers in a major capital gains taxation reform that sees a tapered rate of just ten per cent replaced by a flat rate of 18 per cent.

So the industry has spoken and the BVCA isn’t going to split into factions – publicly at least. As far as the outside world is concerned, the members continue to speak with one voice, united under a single brand.

You don’t have to check the “big deals” section of Done Deals to know that the large end of the market has ground to a halt.

During the summer, a US mortgage market meltdown sent shock waves across the financial system and brought the mega buyout funding market to its knees.

There was very little in the Treasury Select Committee’s interim report to ruin anybody’s summer holiday.

$33.6bn and guaranteed a healthy $2.6bn payout for co-founders Schwarzman and Peter Peterson.

Nicholas Ferguson probably isn’t the toast of many private equity dinner tables at the moment.

The Blackstone Group is rapidly becoming a contradiction in terms.

Forget Boots. If you are looking for a private equity deal in Europe’s pharmacy sector that has been genuinely daring, innovative and that has been instrumental in the restructuring of an entire industry, look no further than German business.

There is no “big deals” section in our Done Deals coverage this edition (see p23), because in the two-week period prior to going to press, no private equity deals of larger than €250m were agreed in Europe.

Actions speak louder than words, so the saying goes.

Why is Blackstone planning to float? The answer isn’t as clear as it ought to be, and that should worry anyone at the firm not planning to retire post-IPO.

Private equity’s meteoric rise to public enemy number one has been nothing short of astonishing. But whatever the criticisms levelled at the asset class, one thing it – and in particular the indomitable Kohlberg Kravis Roberts – can never be accused of is being a quitter.

I am glad I put my conscience and climate concerns aside last week by flying to Frankfurt for the SuperReturn conference.

Given that this publication has regularly urged the private equity industry to engage further in philanthropic activities, it is a shame that the new charity foundation set up by a consortium of buyout houses, mismanaged its launch so badly. And I'm not talking about picketing at the opening gala dinner.