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True, $400 billion is a gargantuan sum. Much of it was raised between 2006 and 2008, according to the survey. Record amounts were raised mainly because institutional investors globally, starting with pension funds and sovereign wealth funds, tended to overallocate to private equity to compensate for the enormous inflows from distributions doled out by the general partners while markets were booming. That allows them to stay more or less within their target thresholds. Now that leveraged buyouts have all but dried up, everyone's asking the proverbial question: Is there too much money chasing too few deals? We forget that the same question weighed on people's minds in 2005, when there was upwards of $250 billion of capital overhang, not to mention 2001, when there was about $200 billion in unused commitments. If prior downturns are any determinant, buyout investors have tended to do better in down cycles, when values are depressed. This suggests that private equity funds flush with cash will ultimately find opportunities across an extraordinarily large universe of distressed companies. As long as valuations remain in flux, investors anxious not to repeat TPG Capital's experience at Washington Mutual Inc. will bide their time. Financing is tight and expensive, but already there are signs of renewed activity, however slight. Yes, there's more capital than ever waiting to be deployed. PE folks will say that's a point in their favor. - Vyvyan Tenorio
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News that the private equity capital overhang has risen to about $400 billion in 2009 seems to be making the rounds without much historical context. A 
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