During the buyout boom of 2006 and early 2007, private equity firms could tap a vast pool of credit to cheaply fund mega-takeovers of $20 billion or more, outbidding corporate suitors that had to justify any deals to shareholders. Now, the tables have turned, according to Blackstone President and Chief Operating Officer Tony James.

As the credit crunch has made it difficult and costly to get funding, private equity firms have lost their ability to finance larger LBOs. The biggest deals that can be realistically financed are about $5 billion, with most deals hovering in the $1 billion range, James said.

Corporate buyers, though, are using cash on their balance sheets to take advantage of slumping stock prices and make acquisitions without the fear of being outbid by private equity firms, James said.

“We’re seeing more competition from strategics than we did in 2006,” James said. “A lot of them view that there’s a pretty benign antitrust environment, and their targets’ stock price is down.”

Corporate deal-making in the U.S. totaled $402 billion in the second quarter, up from $136 billion in the first quarter, Thomson Reuters said. Meanwhile, deals by financial sponsors trailed significantly, totaling $27 billion in the second quarter, and $22 billion in the first quarter.

Blackstone said it committed $2.4 billion of new equity in private equity from April through July. Meanwhile, corporate private equity revenue – including management fees and performance fees – totaled just $92.4 million in the second quarter, down from $400.5 million a year ago. Still, Blackstone’s assets under management increased to $25.08 billion, up from $23.48 billion a year ago.