NEW YORK (Fortune) -- Within the private equity industry, people like to throw around phrases like "size matters" and "in 2007, you'll see what big really means."
The bluster is not unjustified, given the fact that the industry moved with a crushing velocity in 2006, sucking up name brand companies like Hertz, Neiman Marcus and Alberton's in LBO megadeals that have arguably paved the way for a $50 billion deal in 2007.
As noted at the Dow Jones private equity analyst outlook conference Tuesday, "It's as if the [private equity] industry had the markets in a trance."
But if there is a chink in the private equity armor, it may be the people who ultimately write the checks. The "limited partners," those who let private equity firms invest their money, may balk at some of the most attractive deals in the future, said Sheryl Schwartz, managing director of alternative investments at retirement fund powerhouse TIAA-CREF.
Schwartz told attendees that there are simply too many potential deals out there, and that the big megabuyouts still need to prove that they can generate returns as well as headlines. Her group is nervous about the high multiples being paid and the growing debt, so it has limited its commitments to the huge buyouts to 30%. "The top five deals accounted for 35% of the capital raised," referring to the fact that a few megadeals dominated the M&A landscape. She adds that these firms are coming back to the market for more funding, but that she doubts they've deployed all the capital they've already raised.
Moreover, Schwarz said that TIAA-CREF, which has more than $400 billion in combined assets under management, had to turn down groups with "very good track records" because of concerns about multiples and debt levels.
Participants noted that in the world of limited partners, there aren't enough people to do the due diligence necessary to look at all the possible deals, and that this could mean that opportunities are getting away. And there may be other disincentives to further huge deals. Jeffrey Walker, chairman and CEO of CCCMP Capital Advisors, said that megadeals are risky because it's hard to know who, in a 6-firm consortium of private equity players, will really be in charge. "Building that consensus is a hard thing, even if we're all the best of friends," said Walker.
Of course, in the fast-moving world of private equity, it may not necessarily be a bad thing to limit commitments. Though the conference mood was jocular, the tech boom was invoked more than once by more than one speaker, as panelists all noted that the boom can't last forever.
"Until something goes really bad, you'll be surprised at how 'big' big really is in the short term," said Lawrence Schloss, chairman and chief executive at Diamond Castle Holdings. If this sounds bubble-like, then maybe the markets will be glad the limited partners slowed the train. 
