Europe's capitals may be quiet in this holiday month of August, but when politicians and legislators return in less than two weeks, pressure will build again to hit the sector with tough and restrictive legislation.
The banks may have caused the global financial crisis, but the private equity industry and hedge funds have thus far borne the brunt of the backlash. More curiously, while the hedge funds have successfully enlisted the support of the UK Treasury and City minister Lord Myners to lobby Brussels to draw the sting from the proposals, the private equity industry's effort has had much less traction. In fact, it has been a PR nightmare.
It is worth asking what the industry has done to have generated such hostility. Perhaps the key is in what it has not done. It failed in the boom times to build bridges and explain clearly what it was all about, what its skills were and how it added value. Instead, it hid behind the 'private' label, saying in effect that what it did was no business of anyone other than its investors. It was only when it came under sustained attack in the UK that it became significantly more open. But by then the damage had been done. Its critics had filled the vacuum and, in mainland Europe in particular, it is now indelibly associated with asset stripping and overloading firms with debt. There is fundamentally a disbelief that private equity adds value other than by financial engineering.
The other mistake was to cry wolf too often about other things, so the public is now less inclined to listen. The industry made a fuss, for example, about the change that effectively increased the capital gains tax rate from ten to 18 per cent, ignoring the fact that it is still one of the lowest in Europe and private equity partners are still taxed at this rate rather than the income tax rate on a significant slice of the money they take out.
Lastly, it does not punch its weight. Many of the biggest houses have been uninterested in its trade association and until recently have failed fully to co-ordinate lobbying efforts. So there is a lot to do - and very little time left to do it.
Anthony Hilton is City commentator on the London Evening Standard