Across the American landscape, in flashing images along rail lines and highways, on the edges of cities and in small towns, lies the scattered evidence of the middle-market past: the sagging brick mills, empty warehouses, weed-choked parking lots. This is the face of economic change, of a once-prosperous past. True, well-known, global companies -- General Electric, Apple, Coca-Cola, IBM -- grab the spotlight. But for all the immense size and power of big-cap corporates, the economy's energy still arises from that broad and deep sector known as the middle market. If manufacturing stages a revival, it will undoubtedly begin in the middle market. If the economy fully regains its mojo, it will be most evident in the workshops and warehouses of the middle market. All businesses, even sizable ones, rise and fall; flourish, grow, decay and die, particularly in the middle market. The American middle market as a phenomenon is remarkably robust historically; but that belies the fragility of individual companies, which are exposed to the vagaries of the macroeconomic weather, to changing technologies and competitive forces, to shrewd decisions and dumb.

We have long been fascinated by this Schumpeterian dynamism in the middle market. In fact, this is the first of six special issues The Deal magazine will dedicate to the middle market in 2012, with a particular emphasis on a participant that, over the past four decades, emerged from that vast and diverse pool of midmarket companies: private equity. The current political debate tends to overlook the fact that private equity was gestated within the middle market for a very good reason: Midmarket companies, unlike large-cap corporates, have long been relatively starved for capital. Family-owned companies wanted to monetize their holdings as proprietors aged; growing companies required capital to expand, build new plants, buy new technology or attempt overseas forays; mature companies needed financing to refire growth engines. Private equity offered the middle market an option beside the local bank, a sale to a large corporation, bankruptcy or slow obsolescence. For all the headlines generated by megabuyout shops, the great mass of PE firms still operate in the middle market and are regional, even local, in nature. That's one reason we've long reported on regional economies and, more recently, tried to map the dense networks of middle-market private equity investors, lenders, advisers and entrepreneurs. (See The Deal's City by City.)

Why is private equity so deeply interwoven with the middle market? Well, this isn't your grandfather's middle market. Private equity emerged in the '70s around the time globalization was accelerating and overseas competition was mounting. The middle market has always been commercially dynamic, but many companies felt protected if they were able to build strong regional franchises. But if globalization, and its catalysts, faster and cheaper communication and transportation, broke down national barriers, it also attacked regional ones. This particularly wracked U.S. manufacturers, beginning in the '70s. But it affected all companies. Those that might once have grown slowly but comfortably now had to expand more quickly, to move more aggressively, to buy rather than sell, to actively seek out new markets and cheaper suppliers. While the hostile M&A surge of the '80s famously saw iconic corporations come under attack, M&A also swept the middle market; that transactional dynamism continues today (see Auction Block). Much of that buying and selling involves private equity, which is particularly suited to mature companies with steady cash flows and deep appetites for capital. This marriage of the middle market and private equity would never have continued if it was one-sided.

Competitive globalization remains a fact of life. You can debate private equity's fee structure, or tax treatment, but you can't deny that this technique has spread around the world, not only carried by U.S. buyout shops eager to tap new markets but increasingly by local firms operating within developed financial sectors, from local capital markets to sophisticated advisers and investors. We look at two aspects of this internationalization of private equity in this issue. David Carey examines France's buyout industry as it copes with turmoil in the euro zone. And Matt Miller takes an eight-country tour of indigenous private equity shops and discovers just how deeply private equity has sunk its roots. It shouldn't be a big surprise that, after the buyout boom of 2006 and 2007 -- a period that now looks anomalous -- the middle market again appears as the most fertile field for private equity. The marriage, despite its ups and downs, survives.