For example, 46% cited "look-back legislation and regulation" as their biggest concern related to PPPs and potential investments in distressed bank assets, while 25% worried that there could be public backlash if eventual profits were seen as too high. Another 17% said the complexity of asset valuation was their biggest issue, while 13% had misgivings about partnering with a government agency. Hessing comments that the survey respondents were "concerned that the rules of engagement on public-private partnerships will likely change as the market develops." As a result, he says, "the PE sector is seeking more clarity before investing."

More than 35% of the 200 PE investors KPMG surveyed last month said energy would be the most appealing sector for private equity as the economy recovers. Financial services and technology tied for second place with 15% each, followed by healthcare and business services, both of which were cited by 12% of respondents.

As to when that economy will recover, survey respondents tended to be more bearish than the respondents to the National Association of Business Economists, 90% of whom expect the recession to be over by year's end. In KPMG's survey--conducted during last month's SuperReturn conference in Key Biscayne, FL--43% predicted the economy would begin recovering next year, while 39% said it wouldn't happen until after 2010. Only 18% of respondents said they expect a recovery to happen this year, including 7% who think it could happen by the end of the second quarter.

"PE investors, by their nature, work to anticipate the downside in the market, so I would say those who took this survey are planning for the worst in an elongated cycle and hoping for the best," Hessing says in a release. "They want no negative surprises."