Given the increasing competition among private equity firms, the future of the industry looks challenging.

While investors all over the world are worried about rising oil prices and their impact on the returns on their investment, private equity investors seem to be tension-free. Yet, there is a reason for them to worry. With increasing fame, the number of private equity firms is rapidly increasing. This in turn is resulting in competition among them, which is posing many challenges for them.

The history of `modern-day' private equity firms dates back to the 1960s when the first of today's big private equity firms, Warburg Pincus was established. Till late 1970s, private equity firms found in that era, were involved in buying shares in companies in anticipation of selling them in the future at higher prices. In those days, private equity as an investment option was restricted to some wealthy High Net worth Individuals (HNIs) in America. However, gradually, they increased their scope to invest in small, young and fast growing companies. As the years passed, they gradually started investing in buyouts of large well-established companies.

During the late 1980s' bubble, private equity firms earned a bad reputation for their role in the infamous leveraged buyouts and hostile takeovers. Perhaps, this criticism slowed down the growth of the private equity firms. The second wave for the private equity firms began during the dot.com bubble, when a large number of these companies evolved to finance the budding hi-tech companies.

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