During the past decade it sometimes seemed as if anyone could be a private-equity investor. Rising valuations for portfolio companies, and cheap financing with which to buy them, boosted returns and reeled in cash at an astonishing clip. Improving the efficiency of a portfolio firm, by contrast, contributed rather less to the industry’s returns. As acquisitions accelerated, more and more Americans came to be employed, indirectly, by the industry; today more than 10m toil for its portfolio firms. But last year private equity’s twin tailwinds went into reverse, as valuations fell and leverage became scarce. By the summer, dealmaking had collapsed. Transactions agreed at high prices in headier times began to look foolhardy. READ MORE