This article originally appeared on Forbes.com.

The global economy’s insatiable demand for energy in all its forms has made the energy sector a magnet for high-wattage private equity (PE) interest. As we explain in Bain & Company’s Global Private Equity Report 2013, strong recent fund-raising activity by PE funds targeting the industry suggests that investments in the energy space will be plentiful over the coming years. Big energy-focused investors that are raising capital include Denham Capital, which closed a $3 billion fund last April, and Riverstone Holdings, which recently lifted the hard cap from $6 billion to $7.5 billion on its current fund-raising in the face of keen investor interest.

Accounting for 10% of 2012 buyout deal value worldwide, private equity investment activity in energy has held steady over the past four years, but the deal mix has shifted. In the years preceding the 2008 global downturn, power and utilities attracted the bulk of PE investments. Last year, however, 83% of energy-related buyout deal value was for oil and gas properties—nearly half of them in North America, including 2012’s biggest buyout, Riverstone Holdings and Apollo Global Management’s $7.2 billion acquisition of EP Energy.

Recent private equity deal making in the power and utilities space has focused primarily on emerging markets, where rapid economic growth is boosting demand for energy generation and distribution infrastructure. The power and utility subsector is also attracting PE interest in Western Europe, where government incentives have encouraged investments in wind, solar, waste-to-energy conversion and other renewables. In both Western Europe and the US, where aging infrastructure requires replacement or reinvestment, PE investors are scouting opportunities in equipment and service companies that supply the components required to keep plants running.

By far the hottest draw for private equity investors in energy lately is the oil and gas sector, where the discovery of vast new extractable hydrocarbon deposits once locked up in shale rock or in deepwater seabeds have ignited wildcatter fever. In North America, the epicenter of the shale revolution, hydraulic fracturing (“fracking”) and new horizontal drilling techniques have unleashed opportunities across the entire oil and gas value chain.

Many private equity acquirers are staking out claims in oilfield equipment and services, which accounted for 45% of deals in 2012 and will likely remain a mainstay of oil patch deal making going forward. Because it resembles investments in traditional industries, targeting equipment and services companies—from drilling rig leasing and seismic testing to maintenance and transportation contracting—is the most approachable way for the majority of PE funds to play in the oil and gas sector. PE funds that invest in equipment and services stand to benefit from the double-barreled growth of the industry’s more than $1 trillion in annual capital and operating expenditures worldwide. Opportunities abound to expand organically by adding customers or the suite of products and services on offer, or through acquisitions by rolling up competitors in fragmented segments of the industry or by moving into a new geography.

Like discovering elusive oil and gas deposits, the challenge for private equity funds investing in the equipment and services sector lies in ferreting out rich pockets of opportunity. A thorough due diligence process should focus on four key areas. First, private equity acquirers need to drill into how many different businesses the target company participates in and what its revenue profile is. Second, successful PE acquirers are careful to identify the target business’s most important risk exposures, particularly its vulnerability to cyclical swings—and the buffers it has against them. Third, acquirers should evaluate the target’s position with its customers; companies with strongly differentiated technical expertise, whose products and services are mission critical are better positioned to profit from their customers’ success. Fourth, successful acquirers carefully size up the target’s growth opportunities. At a time of generally high asset values, prices for equipment and services companies fully capture the growth tailwind of the industry, so future growth will need to be created by the new PE owner.

Finally, no due diligence would be complete until the potential private equity acquirer sizes up whether the people who will run the business have the management skills and leadership experience needed to generate a gusher of returns.

Written by Hugh MacArthur, Graham Elton, Bill Halloran and Suvir Varma, leaders of Bain & Company’s Private Equity Group.