Private equity investors are using current financial market constraints on liquidity to negotiate favorable deals, as private equity general partners have watched the values of their portfolios fall profoundly. Efforts to attract additional investment haven't been easy, as potential limited partners are reluctant to make long commitments in an uncertain marketplace. This has given limited partners a stronger position from which to negotiate both fees and terms and conditions.

Limited partners are getting a leg up on the private equity funds in which they invest, signaling a change from the historical trend in which funds could push for aggressive compensation based on the returns they provide. In a poll conducted by Preqin, 43% of investors noted a power shift from fund to limited partner, with only 2% seeing a shift toward the general partner.

The venture capital (VC) industry demonstrated its commitment to the clean technology space in the second quarter of 2009, pumping $1.2 billion into the sector, according to a report by GTM Research. VC investments in cleantech are up 43.5% from the first quarter of the year, when $836 was put into play in the cleantech space.

The number of transactions increased, as well. In the first quarter, 59 deals were completed, and deal-flow surged 44% to 85 in the quarter just finished. Average deal size remained fairly consistent: $14.2 million for the first quarter and $14.1 for the second.

When The Blackstone Group (NYSE: BX) went public, many observers -- myself included -- were concerned by the total lack of corporate governance checks and balances.

But at the time, the private equity industry was so hot that Blackstone could do no wrong, and no one cared enough to complain. But now that KKR is mulling a plan to list on the New York Stock Exchange, things could be different. The wheels have come off the industry, at least for now, and the arrogant attitude of "We'll tell you what we feel like telling you and you'll like it" may not play so well.

On Thursday, the Federal Deposit Insurance Corp. (FDIC) is expected to propose new guidelines for private-equity investors seeking to buy failed banks. Those guidelines are intended to ensure that these largely unregulated firms don't take too many risks with troubled banks or buy and flip them.

The new rules come as private-equity firms have grown increasingly active in the banking sector. FDIC Chairman Sheila Bair said she's comfortable with the private-equity deals the agency has struck for failed banks such as IndyMac and BankUnited, but that a more structured process needs to be put in place.

The complicated legal fight over the implosion of the private equity buyout of Huntsman (NYSE: HUN) has been settled. The firm was able to get $632 million in cash and $1.1 billion in financing from Credit Suisse (NYSE: CS) and Deutsche Bank (NYSE: DB).

Basically, Huntsman claimed that these financial firms failed to uphold their responsibilities in backing the takeover from Hexion Specialty Chemicals, which was struck in July 2007 at $28 per share. Now, Huntsman is trading at $5.92, primarily because of the plunge in the global chemicals sector.

For private equity investors, one of the worst sectors has been retailing. Just look at some of the failed deals: Goody's, Linens 'n Things, Mervyns, and so on.

Despite the carnage, it looks like private equity operators are seeing opportunity in the sector. For example, CCMP Capital Advisors recently agreed to pay $202 million for defunct Eddie Bauer.

And, this week we got another deal: BC Partners announced a $350 million direct investment in Office Depot (NYSE: ODP).

Based in China, GOME Electrical Appliances is a top electronics retailer. However, the firm has been under a cloud lately. After all, GOME's founder, Huang Guangyu, is under investigation for alleged financial fraud.

But, such things aren't a deterrent for Bain Capital. As expected, this private equity operator announced a deal to buy about $233 million in convertible bonds in GOME. What's more, the retailer plans to sell $214 million in shares, with a discount of 40%.

The $52 billion merger of Anheuser-Busch InBev has resulted in some nice opportunities for private equity firms. For example, KKR recently purchased a division of the firm -- Oriental Brewery Co. (the number two brewer in South Korea) -- for $1.8 billion.

Doesn't sound like a lot? Well, it is a big deal. In fact, it's the biggest private equity deal in nine months.

Back in 2007 -- at the height of the private equity bubble -- the Chinese sovereign wealth fund, China Investment Corp. (CIC), agreed to invest $3 billion in Blackstone (NYSE: BX). Of course, it was a disaster. In all, the investment lost roughly two-thirds of its value.

Despite all this, it looks like CIC hasn't given up on Blackstone. In fact, according to a piece in the Wall Street Journal, CIC is prepared to invest $500 million into a Blackstone hedge fund vehicle.

In 2005, several Chinese entrepreneurs started a milk production company, Modern Dairy. The company realized there was a huge opportunity in China for milk as right now the country is third in the world in terms of production.

Besides, in light of some of the contamination problems in the industry,especially last year's melamine scandal, there was a need for a better approach.

Well, Modern Dairy has caught the attention of the mighty private equity firm KKR. This week, the firm invested $150 million in the venture, according to Bloomberg.

The Carlyle Group, which is an $85 billion private equity powerhouse, recently published its annual report. It's a sobering document.

However, there are some interesting tidbits. For example, despite the financial turmoil -- where three deals went bust -- Carlyle was still able to raise $19.9 billion. What's more, the firm invested $12.6 billion in equity last year.

What about the future? Well, Carlyle's co-founder, David Rubenstein, who gave a presentation at the Aspen Global Leadership Network conference, offered some insight on what's ahead, according to BusinessWeek.

Activist investor Carl Icahn is reportedly interested in taking another run at Delphi Corp. after a federal judge ordered the bankrupt auto parts supplier to open the sale of its assets to potential bidders, in addition to the previous offer from private-equity firm Platinum Equity.

Icahn's auto-parts company, Federal-Mogul Corp. (NASDAQ: FDML), had held discussions with Delphi, but the Presidential Task Force on the Auto Industry, which was set up by the Obama administration to oversee the restructuring of the U.S. auto industry, preferred the Platinum Equity deal.

Last week was a busy one for San Francisco-based private equity firm Golden Gate Capital. It not only reached an agreement to acquire the assets of the J. Jill Group Inc. from Talbots Inc. (NYSE: TLB), but also reached a deal in the sale of SoftBrands Inc., a Minneapolis-based software producer.

Jill Acquisition LLC, an affiliate of Golden Gate, agreed to purchase the womenswear retailer for approximately $75 million. The deal includes assets and liabilities, including a distribution center in New Hampshire, and intellectual property and inventory. Jill Acquisition assumes the leases of 204 J. Jill stores, with the remaining 75 expected to be closed by Talbots. Talbots' board unanimously approved the deal, and the transaction is expected to be completed in the second quarter.