These are anxious times for Europe's private-equity groups. The buyout industry was banking on a revived IPO market and a thaw in credit conditions to stage a comeback this year. Yet six weeks into 2010, the industry is struggling with its bread-and-butter business: buying and selling companies.

Unless the outlook improves soon, groups will find it hard to raise fresh funds from investors still fretting about how bad the returns will be from money invested in the asset class during the bubble.