During the financial crisis, private equity, mezzanine and venture capital firms have spent a lot of time "cleaning house." The financial crisis has made cheap debt less available and thus private equity and other firms are not able to complete deals with the huge leverage ratios that existed prior to the crisis. So, they have taken a close, hard look at existing investments in order to determine which could be saved and have allocated resources appropriately.
This sort of review has included, from a legal perspective, review of debt covenants and commercial contracts. The firms have wanted to determine which of their portfolio companies are in danger of violating a financial covenant or failing to perform under a critical contract.
Recent reviews have also included analyses of potential exit strategies in a down economy. The potential strategies include the traditional options of bankruptcy, sale and IPO. IPO's have been down sharply until very recently, so this option has not been given much consideration. Sales have continued, but with valuations low, this is often not a favored option. Bankruptcy is, as always, fraught with difficulties as firms consider the opposition of creditors as well as the value of their secured positions, if any.
Throughout the financial crisis, distressed investing has continued. With the credit markets tight, private equity and other firms have taken some opportunities to fund companies that have not been able to get credit in the traditional credit markets. These efforts persist, and the firms continue to focus sharply on the fundamentals of these companies in order to protect their investments.