In its latest quarterly review, CMBOR confirmed that UK buy-outs reached a total value of £17.1 billion in the first nine months of the year, compared with £40 billion for the same period last year.

The review showed a decline in deal volumes, with 503 buy-outs completed by the end of September compared with 672 for the whole of last year. In terms of fundraising, CMBOR noted that IPOs were at a standstill this year and a dramatic fall in secondary buy-outs had led to lower levels of activity in the exit market.

Backing these findings, a roundup of predictions for the private equity industry next year compiled by Equity Dynamics, a private equity communications agency, revealed that buy-out chiefs were pessimistic about the fundraising environment for 2009.

Neil MacDougall, Silverfleet Capital managing partner, said: “For those poor who start to fundraise in 2009, conditions are likely to be dire.”

Bill Crossan, Close Growth Capital managing director, added: “The fundraising environment will be tough. Investors are not immune from the crunch and many have their own liquidity problems.”

On how the private equity industry will evolve to survive the current shortage of funds, MacDougall said: “There will be a steady trickle of conventional smaller LBO deals. We will also see a number of PIPE (private investment in public equity) transactions, with investors taking minority stakes in listed vehicles and unconventional equity only transactions.”

Mark Wignall, Matrix Private Equity Partners CEO, added: “Solidity, back to basics, traditional, cash generative, straightforward, transparent will be the watch words” in the times ahead.