It was as if Steve Jobs had suddenly decided PCs were better after all. In March, the Blackstone Group, one of the nation’s largest buyout firms and the No. 1 cheerleader for taking companies private, announced that it was going public itself. It seemed a clear sign that private equity nirvana was over. But the truth is, the era ended months earlier. Private deals became so huge—and the industry’s profits so outrageous—that buyout kings like Blackstone C.E.O. Stephen ­Schwarzman could no longer stay out of the limelight. Not any more.

For years now, the Blackstones of the world have been extolling the freedom of privacy. Being a public company, they argued, is death by a thousand S.E.C. filings. Auditors have become like the Ming dynasty eunuchs, holding all the real power, while plaintiffs’ ­lawyers pounce on any mistake, honest or not. Oh, and then there’s the media, always getting its nose in where it doesn’t belong. With all these nuisances, corporate executives became convinced that shedding the baggage would allow their true genius to blossom.

But the industry suffered from its own success; its deals became so big that they were private in name only. Take the largest deal in history—the recent $45 billion takeover of TXU Energy, the Texas utility. Kohlberg Kravis Roberts and Texas Pacific Group, the firms leading the buyout, realized they couldn’t nab their prize with money (and debt) alone. To appease environmental groups, the firms had TXU pledge to cut emissions, back federal global-warming legislation, and halt plans to build eight coal-fired power plants in Texas. To satisfy regulators and politicians, the private equity firms said they would hold on to the utility for at least five years and not add any acquisition-related debt. To placate customers, the firms promised to reduce rates. In other words, they had to act just like...a public company.

Meanwhile, the buyout firms’ deal frenzy is making it harder for them to do business in other ways too. When takeover firms targeted companies like Clear Channel and the U.K. real ­estate group Countrywide, shareholders squeezed the private equity firms, trying to get more money for their shares. Sam Zell, the wily investor, sold his commercial-property empire, Equity Office, to Blackstone at what now looks like the peak of the real estate market. And C.E.O.’s everywhere are scouring their companies for dogs, in the hopes that private equity firms will snatch up an underperforming unit or two. Other recent deals seem already to be going sour. A group led by Cerberus Capital Management paid $14 billion for a majority share of General Motors’ financing unit last year, but now must nervously watch as poor subprime lending choices threaten the business.

Doing deals for the sake of doing deals has another downside: It’s likely to cut into profits, sowing additional seeds of this era’s demise. We all know the private equity firms are engorged with cash. But as their funds get bigger, they need bigger prey. And the bigger the takeovers, the more stakeholders there will be to appease.

That’s all good, at least for the rest of us. Reality has dawned on the buyout czars: Companies can’t just be levered up, stripped of assets, and run on bare-bones budgets. There’s more to it than that. Companies are enmeshed in relationships with their customers and government. And so are private equity firms. There is no escaping responsible citizenship.

It’s about time they figured this out. Fortunately for the firms, their time-honored exit strategy for this conundrum is clear—sell their private-­company investments to the public. And now they’re hoping to do one better: flip themselves.