The tail wind we expected private equity to enjoy coming out of the recession has turned out to be simply a tail breeze. Recent prevailing winds out of Washington are increasing the chances that we enter the fourth quarter facing slight headwinds.

This is our conclusion after spending the past six months traveling throughout the country and meeting with 90 middle-market private equity funds with total committed capital of approximately $80 billion and average committed capital of $720 million. Our conversations with founders, managing directors, VPs, principals, analysts, operations specialists and deal originators have revealed a distinctive downturn in the optimism we saw in the market in early 2011.

We anticipated upbeat talk of higher multiples, and many more deals closing this year, but we found that the pessimism of 2010 has stubbornly stuck around at the funds. Many fund executives still express concern about managing/exiting their portfolios and finding quality dealflow; as a result, our conversations largely centered on their medium- to long-term plans -- such as the repositioning of their firms, teams and portfolio companies for making and disposing of investments in the next 12 to 18 months, as well as restructuring for the next fund and the longer term.

There are a number of short-term industry bright spots to speak of. Private equity portfolios are generally doing well, and PE funds are being as aggressive at taking advantage of market conditions and exiting the existing portfolio as they are at finding new deals.

It's also clear to us that everyone within the PE firms is busy: with finding and executing on new platforms; finding and executing on bolt-on acquisitions; working with the existing portfolio through transitions of growth, management change or product line changes; and executing on exits. Moreover, after three years of a predominant hesitancy to add to junior staffing levels, we see evidence of firms developing the confidence to make these investments in talent.

Yet these positive indicators from fund leaders are strongly tempered by their less-than-rosy statements about other dynamics afoot in the industry -- namely, that the supply of money continues to exceed the supply of good deals, leading funds to reposition deal origination strategies, broaden individual fund investment frameworks and adjust fund management team roles by expanding deal-sourcing support and operations team capabilities.

What's more, many fund executives relate that deals that are able to be sourced take longer to close and diligence is much more thorough, resulting in an increase in broken deals.

It's not surprising that short-term drags on recovery make fund executives think about the long term. We've repeatedly been told that fundraising continues to be challenging, and plans for new funds are not noticeably larger than their predecessors, except in predecessor situations where committed capital is less than $100 million. Firms with weak investment theses or weak GPs are going out of business; further, due to the inherent illiquidity of PE investments and long life of middle-market funds, this trend isn't a bursting bubble, but a slow leaking of individual firms disappearing from the industry.

Funds' latest messaging to the LP community, as well as prospective entrepreneurs, emphasizes deep vertical industry expertise and development of in-house or outsourced operational skills, such as expertise in sales optimization, recruiting, product sourcing, and applying lean thought process models to nonmanufacturing industries.

Significance can also be found in the issues fund leaders don't mention. We did not hear much talk about Dodd-Frank, the Greek economic crisis, the U.S. debt ceiling, lending conditions or the lack of portfolio company performance visibility until the events of early August.

Perhaps the downturn has psychologically hardened everyone. Furthermore, portfolio business models have harnessed a nimbleness that was not present in 2008; thus, when bad economic news recurs, many portfolio companies are strongly primed to not only adapt, but survive.

With portfolios more firmly positioned for our industry's new normal, we look forward to the next wave of private equity conversation: how GPs seek to balance the economic realities of LP fee pressures with a real need for an expansive (and potentially expensive) deal-sourcing, operational-consulting and talent management approach to middle-market portfolio management over the next decade.

Thomas Bonney is founder and managing director at CMF Associates.