PE behavior has shifted from a defensive position to aggressively seeking new opportunities.

Amid volatile markets and an evolving legislative landscape, private equity momentum moves forward.

The first half of 2010 was characterized by volatile global equities markets, mixed messages about the state of the global economy and sweeping regulatory changes that are likely to have a profound impact on the world’s financial system.

As we move into the second half of 2010, PE behavior has shifted from a defensive position to aggressively seeking new opportunities and deploying capital at an increasing rate.

Firms that worked diligently on their portfolios through the trough of the economic cycle to position themselves for the eventual upswing are now beginning to see those efforts pay off.

Values of portfolios are rising, exits are up markedly and distributions are beginning to flow back to LPs.

While substantial challenges remain — the risk of a double-dip recession, the impact of the financial reform and stubborn fundraising markets — opportunities are at last beginning to outweigh the risks.

Recessionary dislocation remains throughout developed markets and emerging markets represent an underpenetrated opportunity. We expect PE firms to be busy over the next several years as they work to actively capitalize on this environment.