debt capital markets - M&A

be worse, depending on the specific debt markets. These markets have driven M&A, the huge boom in in credit, especially in the leveraged finance and mortgage market, will decline tremendously over the next 2-3 years and then stabilize. While M&A in the first half of 07 was driven in a large part by PE, which was driven in a large part by the easy access to credit, there are still strategic players with huge cash balances and healthy stock prices who will swoop in now that competition from PE will decline. So while M&A will be hit fairly hard by the decline in PE, it won't be a complete shutdown like after the tech bubble, and will more likely revert back to old-school corporate to corporate M&A.

Leverage finance, mortgage and structured finance groups effectively have hiring freezes on and have begun to fire and will continue to depending on how long the market freeze continues.