When I last wrote about boutique investment bank Evercore Partners (NYSE:EVR) in May, I warned that a slowdown in M&A activity could put a big-time hurt on the firm. This time, at least, my crystal ball worked perfectly: Since early June, Evercore's stock price has plunged from $33 to $20. If you think that's bad, keep in mind that there's still no definitive evidence that M&A has actually slowed down.

According to yesterday's Q1 report, Evercore's revenue increased 49% to $65.9 million, but it posted a net loss of $44.2 million, or $4.68 per share. However, that net loss did include an unusual vesting of $126 million of employee stock rewards following last year's IPO.

The firm has also plowed dollars into its European operations, and it's been aggressively hiring high-priced, top-notch rainmakers. Stephen P. Schaible was the managing director and head of Global Energy Investment Banking at Citigroup (NYSE:C). Fellow recruit Mark Vander Ploeg served as vice-chairman of investment banking at Merrill Lynch (NYSE:MER).

In other words, Evercore's hardly acting like a firm that believes M&A is evaporating. But what about the credit crunch that's currently squeezing private equity deals? On the conference call, Evercore's co-CEO Roger Altman said it's "too early to judge." He added the pipeline was healthy, and that the firm has had a strong start to Q3.

Evercore is still a big player in private equity. Some of its pending deals include First Data (NYSE:FDC), Thomson Learning, and Alliance Data Systems (NYSE:ADS). Even if it slumps in that regard, the company's still at least partly protected, thanks to its particular expertise in advising on strategic M&A transactions. Its past deals include the CVS Caremark (NYSE:CVS) merger and GE's (NYSE:GE) purchase of the aerospace division of Smiths Group PLC. The current weakness in private equity may actually prompt greater M&A activity from strategic buyers who see better valuations.

That said, even a few failed deals will likely hurt Evercore significantly. That may be why abundant skepticism swirls around its stock. While shares are far cheaper now, I think this is still a risky bet for Foolish investors. It's probably best to wait until the market environment gets clearer.

We've acquired further Foolishness:

Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 4,156 out of more than 60,000 total participants  in CAPS. The Fool's disclosure policy is merger-proof.