Up until the credit crisis, private equity firms had it made. They had plenty of leverage to play with and could load up their acquisition targets with it. So, they could realize a fantastic return on equity, mitigate their own risks, and show that they were the studs of the Street.

Then, all that went away. Credit markets dried up, and private equity companies lost their acquisition fuel. The numbers aren't as big as they used to be, but it looks like the private equity market is back in action.

Well, what have you done for me lately, right? Investors, less than thrilled with the returns that venture capital funds have been delivering, are taking their money and going home. The number of new funds launching has thus dropped precipitously, and it looks like the industry will be smaller, with fewer players, according to the National Venture Capital Association.

Of course, the next wave will attract many to ride it, and that could be enough to turn the tide (once again).

Private equity returns are down 27.6% year-over-year for the 12-month period ending July 30, 2009, according to a Preqin report received by BloggingStocks. The London-based research house notes, however, that the global private equity industry's dry powder (i.e., uncommitted assets) continues to exceed $1 trillion, suggesting that there is still plenty of capital waiting for a rainy day.

Returns for the past 12 months reflect all the nastiness we've seen and lived -- bailouts, company collapses, equity and credit market mayhem and unemployment rates dangerously close to double-digits. But, the money is still coming in. Preqin puts the rate by which contributions outpaced distributions at 235% for buyout funds in 2008. This category raised $148 billion while distributing only $63 billion, making last year the most imbalanced for these two measures in history.

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.

Investments in clean energy projects and companies reached $155 billion last year, surpassing fossil fuel investments. According to a United Nations report, $13.5 billion in new private investment was directed to companies that are developing new technologies, with almost half that (according to Private Equity Intelligence, Ltd.) coming from clean technology-focused private equity funds.

Clean energy sources account for the majority of energy investments last year, with $105 billion spent on developing 40GW of wind, solar, small hydro, biomass and geothermal energy generation capabilities. Large hydro (25GW) accounted for another $35 billion in investments.

Totaling $140 billion, this accounts for 56% of investments in power last year. The aggregate 65GW, however, represents only 41% of new capacity developed in 2008. Renewable energy dominated the clean technology space, 75% of the total at $117 billion.

Investments in clean energy technology grew 5% from 2007 to 2008, leading to a second consecutive record-setting year. Emerging markets made the difference last year – particularly China and Brazil. China has become the second largest wind market in the worlds (as measured by new capacity) and the world's top photovoltaic manufacturer.

Geothermal appears to be on the horizon for several countries, including Australia and Kenya. Nonetheless, the ongoing financial crisis has put the squeeze on the clean energy space. U.S. investments fell 2%, and growth slowed considerably in Europe.

Just a few months ago, it looked like the subprime sector was destined for a complete wipeout.

Maybe not.

There are brave hedge funds and private equity funds that are moving aggressively into the sector.

The latest deal: Lone Star Fund V L.P. has agreed to shell out $400 million for Accredited Home Lenders Holding (NASDAQ: LEND). Then again, the stock was about $50 a share about a year ago.

Over the past few months, I'm sure management at Accredited has had lots of sleepless nights. They've been able to snag $230 million in financing from hedge fund Farallon Capital Management. There was also a sale of $2.7 billion in loans.

On the news of the Lone Star buyout offer, Accredited's stock surged 9.88% to $15.12 per share. It's actually about two cents above the offer and is an indication that the Street thinks a higher bid may come to the table.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Investors in Rail America, (formerly NYSE:RRA), got a Valentine's Day present in the form of a buyout offer of $16.35 for each share of Rail America stock owned. Rail America is a short-line rail service provider operating 42 railroads over 7,800 miles of track, primarily in the United States, but also operating in Canada and, until recently, in Australia. Rail America was bought by several private equity funds managed by affiliates of Fortress Investment Group LLC (NYSE:FIG). Over 74% of shares held voted in favor of the acquisition. Fortress Investment Group began trading on the NYSE on 9 February 2007. Its IPO began at $18.50 per share. FIG stock closed on Friday, 2 March 2007, at $27.75.

With over $1.2 billion in assets, Rail America was an attractive buy for Fortress Investment Group. No one commodity comprises more than 16% of Rail America's shipping business. It interchanges with several Class I railroads throughout the country and has one of the strongest safety records in the rail transportation industry. Rail America is poised to grow in terms of carload volume but needed access to more funds to do so. With over $30 billion in assets under management, Fortress Investment Group can provide that access. As part of the buyout, Rail America CEO Charles Swinburn will retire. He will be replaced by John E. Giles, who brings 35 years of experience in railroads and the transportation industry to the CEO suite.