Merger and acquisition activity has hit the brakes, along with much of the rest of the economy, but it's a long way from stopping completely.
Experts at a gathering of bankers, lawyers and academics at Tulane University in New Orleans explained to CNBC's David Faber the dramatic changes to the M&A landscape.
Morgan Stanley Vice Chairman Robert Kindler emphasized that M&A has always been a cyclical business.
"It's clear that it's going to be down this year," he said. "Last year, we had a lot of private equity activity — 30 percent of the market. This year, it's going to be down, but there's still plenty of activity going on." (See more in the video at left.)
He referred to large deals involving giants like Microsoft and Yahoo, and said it appears things now seem to be moving toward "a normalized M&A market," similar to the activity seen in 1997 and again in 2005.
Robert Spatt, senior partner of Simpson Thacher, acknowledged that private equity is playing a sharply reduced role, but insisted it's still a major player.
"There's been a deal for Getty Images, there's been a deal for Performance Foods, there are [leveraged buyout] deals happening," he said. "You're not seeing $10 billion P.E. deals, whereas last year, we saw the RJR deal topped twice."
Spatt said the size of this year's deals has been smaller than in years past. Several bids have been hostile, as well.
"Interestingly, on the strategic side, you're seeing a great deal of potential activity, and hostiles," he said. "You have Electronic Arts making a run at Take Two , you have the Diebold deal."
Kindler pointed out that his bank, Morgan Stanley, is involved in all those deals.
Both men admitted that the number of proposed deals that have fallen through has grown recently.
"Deal risk is huge," Spatt said. "You've got 15 or 16 deals since the end of last summer that have blown up, and you've got a couple — Clear Channel being a great example — sitting there right now, and people wondering whether it's going to happen."
What about the fates of his own pending deals?
"That depends on the credit crisis," he said. "The financing needs creativity."