"Uncertainty continues to shackle the psyche of the PE industry," says Shawn Hessing, national lead partner for KPMG's US private equity group, in a release. "With valuation down and the cost of financing up, buyers and sellers are finding it difficult to get to common ground although we are seeing some signs of progress."

Thirty percent of survey respondents say the lack of lending is the biggest issue facing the industry. A lack of exits is cited by 26% of respondents, with 24% identifying the debt coming due on deals in 2011 and 2012 as a major worry. A pullback by limited partners is the biggest concern for 13% of respondents, and the remainder is worried about the possibility of increased regulation.

KPMG's survey says 58% of respondents don't think IPO demand will return before 2011 at the earliest, and 24% say they expect companies will shun IPOs in favor of alternative sources of funding, such as growth capital. Thirty-seven percent of respondents say they expect demand for public company offerings in 2010, and 6% think the prospects are too hard to predict in this economy.