NEW YORK ( TheStreet) --This was not a big year for private-equity deals. In fact, the biggest buyout of a public company in 2014 was the $8.7 billion deal for PetSmart (PETM) .

The lack of big deals is expected to continue in 2015. It's not hard to see why: Investors are losing faith in private equity.

The reason is companies that went private for over $10 billion have not performed well since being bought out. That has scared off some of the investors in the biggest private equity funds. As a result, more private equity shops are turning to smaller, middle-market deals instead of behemoth buyouts to generate returns. That strategy appears to be more successful.

The toxic combination of too much leverage and overpaying for assets tarnished the reputations of some of the industry's top names: David Bonderman, Henry Kravis, Stephen Feinberg. Each one did debt-laden deals in the LBO boom that preceded the financial crisis -- only to see assets levered with billions of dollars default. Other sponsors are still nervously looking for an exit. 

Henry Kravis and KKR's (KKR) partnership with David Bonderman and Goldman Sachs' (GS)   private equity arm produced the $45 billion buyout of TXU in 2007. It also produced the biggest bankruptcy in the history of private equity this April. Stephen Feinberg's $7.4 billion Chrysler bet had to be bailed out by the U.S. government -- although, according to reports, Cerberus Capital Management managed to salvage much of a soured deal.

For Bonderman and TPG Capital, the headaches are only beginning: Friday, Caesars Entertainment Operating Co., which runs Caesars Entertainment  (CZR) , said it plans to file Chapter 11 early next year in an attempt to reduce $18 billion in debt.

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