And so we wait. For the past month packed with crises, fear, swooning markets and backward glances into the abyss, the mergers and acquisitions business has been whipsawed like everything else on Wall Street. There are many things to be said about M&A, but it's hard to blame it for the specific woes racking the financing sector, such as subprime mortgages, securitizations or credit default swaps. Not that life is fair. The business did prosper off the lavish leverage of the past five years, particularly when it came to private equity, and investment bankers will undoubtedly be criticized for breathing the same air as other now-famous fat cats. Besides, many M&A advisers make very nice livings.

-- See the M&A Quarterly Review slideshow --

In fact, M&A remains rooted in an older pre-transactional style of finance. It does not require vast draughts of capital, although the ability to provide financing provides an edge. It offers its services as an adviser, not as a principal. It harkens back to partnerships, relationships and the ancient calling of the intermediary.

But like every other function associated with Wall Street, M&A confronts radical instability and change. Competitive M&A units have either been rescued (Bear Stearns Cos.), sold off (Lehman Brothers Holdings Inc.) or peddled to universal banks (Merrill Lynch & Co.) Two of the most powerful practitioners of M&A, Goldman, Sachs & Co. and Morgan Stanley, have become bank holding companies under Federal Reserve supervision, which will ratchet down leverage. Most of the big banks have federal ownership, with implications for compensation. Consolidation is sweeping through a distressed commercial banking sector, which may spread to insurers, hedge funds, buyout shops. And then there is the recession that seems certain to hammer corporate America, creating preconditions of change: winners and losers, buyers and sellers.

Where is M&A going in this new world? We have no sure answers, only possibilities. The fundamental question is how much M&A will take place once the situation stabilizes. Will the climate -- both macroeconomic and regulatory -- favor strategic dealmaking, as it has over the past year of tight financing? Or will private equity, which still has considerable reserves of investment capital, prove competitive? This complex question turns on everything from a willingness of banks to reopen the spigot of leveraged finance to the continued ability of activist hedge funds to pressure companies to generate shareholder returns. Will some securitization markets revive, particularly those for corporate debt and bank loans? How much liquidity will the banks produce? If the situation continues as it is today, the Fed, through its control of leverage ratios, could easily act as a governor on M&A activity. Will corporations continue to bring the M&A function in-house?

And then there are questions about the structure of the business. Many of these issues have been batted around for a decade or more, but, with the destruction of "independent" Wall Street, they're thrown into high relief. There are generally two kinds of institutions selling M&A advisory services. There are universal banks, including (technically) Goldman and Morgan Stanley (now tied up with Mitsubishi UFJ Financial Group Inc.), that can market the one-stop-shop -- though financing could be dear for a while. Their weakness, besides sheer bulk: the kind of embedded conflicts spawned by diversification. Then there are smaller firms, boutiques, M&A specialists, middle-market shops. Smaller firms rarely have much capital. They exist to offer advice, and to make their nut on fees. They can move fast, and not encumber bankers with bureaucracy or conflicts -- though conflicts only truly disappear in utopia. The firms to watch are those in the middle, particularly those that have gone public: Blackstone Group LP, Evercore Partners Inc., Greenhill & Co., Lazard, even Cerberus Capital Management LP (if it can deal with its car problems). Will they feel tempted to integrate upward into space cleared by Bear and Lehman? If they do, how will they be regulated? How will they be treated by the markets? Can they compete with universal banks?

Perhaps the most symptomatic evidence of how this new M&A ecosystem is evolving is to follow the talent flows. Will the sharpest, best-connected bankers begin to leave former "independents" now in the tight embrace of the Fed and Treasury? With capital tight, will bankers with relationships move to smaller shops, with less red tape and the possibility of making the kind of pay that's such a controversial issue? Or will a market starved for capital finally throw the game decisively toward the banks?

We can't answer those questions. But we can begin the process of looking down the rabbit hole.