This article originally appeared on Forbes.com.

Despite a slew of disruptive events that created volatile markets early in 2016, the private equity (PE) industry posted solid results for the year. With investors everywhere on the hunt for yield, private equity remains a favored asset for institutional investors who have the patience for longer-held bets. General partners (GPs) worked hard to keep their preferred status, finding and executing on good deals while rolling up their sleeves with portfolio companies to create value and successful exits.

As we explain in Bain & Company’s newly released Global Private Equity Report 2017, the industry remains healthy when one looks at the top-level metrics, although some of the aggregate figures retreated from 2015. Exit activity was strong, but the totals for 2016 declined as deals that had been on hold during the global financial crisis and its immediate aftermath were finally digested. Fund-raising surged as limited partners (LPs) continued to recycle distributions into new capital commitments, working hard to maintain their targeted allocations of capital to this high-performing asset class.

Returns had another strong showing, continuing to outperform public markets by a sizable gap over both short-term and long-term time horizons, thus reinforcing investor confidence. Global buyout activity, on the other hand, declined. Persistently high asset valuations and stiff competition from corporate buyers, complicated by macroeconomic and political uncertainties across regions, made deal making challenging in 2016. High asset prices can put a limit on the number of deals being done. Many processes fall apart because of a chasm between seller expectations and buyer investment models.

As we will see in subsequent installments of this series, leading PE investors are taking on these challenges. They have been evolving their business models and tactics to deliver the returns expected of them. The future is coming into higher definition, and it will favor those investors who understand acutely what they do best and how to capitalize aggressively on their strengths amid macro uncertainty and fierce competition.

Hugh MacArthur, Graham Elton, Daniel Haas and Suvir Varma are leaders of Bain & Company’s Private Equity practice.