To balance out yesterday’s gloomy post about private equity, a new report from Ernst & Young strikes a decidedly more cheery tone about the industry. The consultancy lauds private equity’s “resilience”, notes improving quarterly trends beginning in late 2009, and talks of “new horizons” in 2010.

The report is realistic about the prospects of private equity returning to the heady days of 2007. For one thing, the debt financing that fuelled mega-deals during the boom times is simply not available—a chart tracking the ever-shrinking size of deals in recent years is telling in this regard. For the foreseeable future, private equity firms will have to hope that it pays to think small.